Archive for the ‘Uncategorized’ Category


In Uncategorized on 23/08/2017 at 10:41




Pluralism, a dying word.

In Uncategorized on 16/05/2017 at 12:40

Last public reading from Thomas Merton

In Uncategorized on 31/10/2016 at 12:44

Greatest Speech by Charlie Chaplin

In Uncategorized on 26/10/2016 at 10:15

Atheism 2.0

In Uncategorized on 03/02/2016 at 15:09

Cyrus Cylinder

In Uncategorized on 03/02/2016 at 15:04


One King, one dynasty, many religion, one cylinder.


Stand by Those Re-Thinking Islam Reformers

In Uncategorized on 27/01/2016 at 10:31


Conversations: Reaching-out across the Air-Curtain

by William Leong Jee Keen

The air curtain keeps the cold air in and the hot air out. We have in Malaysia built air curtains between the Muslims and non-Muslims. You cannot see them but they are there. They are real.

We can never hope to have a peaceful, united nation if our people do not talk and interact with one another. We need to reach out across that Air Curtain to talk to our fellow Malaysian of different ethnicity and religion. I ask you to carry out an active commitment to freedom of expression and freedom of religion to care for our neighbours and share our ideals and dreams with them and theirs with you. Reach out to our Muslim and non-Muslim friends and have conversations. Have a dialogue with complete sincerity and deepest respect for each other’s ethnicity and religion.

In Part I of this Article, I pointed out that the politicization of Islam and the Traditionalists laid down the idea that the primary obligation of Muslims is to establish an Islamic state ruled by sharia. Liberal democracy, pluralism, inclusiveness and tolerance of other religions are labelled as un-Islamic and heretical.

I set out in Part II a thumbnail sketch of a few of those Re-Thinking Islam who argue that these concepts, far from being un-Islamic are in fact, part of the universal values of Islam. I urge non-Muslims to know more about the ongoing debate contested by the Traditionalist and Re-Thinkers. This is because due to the politicization of Islam and the PAS/UMNO cooperation the result of this debate affects us all, Muslims and non-Muslims alike.

Islam: Tolerance, Democracy and Pluralism

Dr Nurcholish Majid (March 17, 1939-August 29, 2005) known affectionately “Cak Nur” was a prominent Indonesian Muslim intellectual. Throughout his career he argued that for Islam to be victorious in the global struggle of ideas, it needs to embrace the concepts of tolerance, democracy and pluralism. In the 1970s, he coined the slogan: “Islam, yes; Islamic parties, no” which became very popular. The slogan helped to combat the view that it was sinful for Muslims to vote against Islamic parties.

Nurcholish influenced by his growing up in a multi-religious society, advocated a secular democracy incorporating a strong policy of religious pluralism. He denounced those that oppose multicultural, multi-religious and multinational life, noting that the Quran states many times, “If God wanted, He could create you to be one nation, but He wanted you to be different nations, so you get to know each other…”

Nurcholish Majid played a critical role in Indonesia’s transition to democracy. His experience as an Islamic activist, student leader, opponent of both the Sukarno and Suharto regimes and also the infighting and inability of Islamic political parties to work together led him to conclude that the mixing of state and religion is counter-productive.

Nurcholish delivered a landmark speech on 2 January 1970 entitled “The Necessity of Renewal of Islamic Thought and the Problem of Integration of the Islamic Community.” According to Nurcholish, one measure of the intellectual lethargy afflicting Muslims was their inability to differentiate between values that were “transcendental from those that were temporal.”

The core problem as he saw it was that “everything becomes transcendental and valued as “ukhrawi [pertaining to the hereafter] without exception” thus excluding it from critical scrutiny due to the alleged sacredness. The results of this general Muslim attitude “are most injurious.” He observed that the “glasses through which Muslims see the scales of values have made them unable to respond properly to the development of thought in the world today.” He observed, Muslims, in other words were intellectually unprepared for meeting the challenges of the modern world because they could not distinguish between issues which were sacred (and off limits to excessive critical scrutiny) and those that were not.

The solution he offered was the “temporalizing” of values which are in fact worldly, and the freeing of the ummah (Muslim community) from the tendency to spiritualize them. He called for new creative thinking and the cultivation of a “mental readiness to always test and retest the truth of a value in the face of material, moral or historical facts (so this may be) characteristic of Muslims.”

Nurcholish’s argument is based on the idea that only God is transcendental and divine and as a consequence everything in the earthly realm should be viewed as temporal and subject to criticism. To confuse the temporal with the transcendental, or worse yet, to assign divine attributes to the sphere of worldly activity is a theological contradiction. “For to sacralise anything other than God, is, in reality, shirk [polytheism]”

Insisting that no Quranic basis exists for the creation of an Islamic state, Nurcholish warned that modern constructions of an Islamic state reduced Islam to a profane ideology, easily manipulated by those who imposed their own views in the name of religion. He equated it with the sin of polytheism (shirk) or idolatry. Thus he also rejects modern Islamists’ contention that imposing sharia as the rule of law is necessary to make Indonesian society more Islamic, insisting instead that true spirituality and religiosity comes from an inner transformation (individual and national). Rather than imposing Islamic law, what is needed is a spiritual path and cultural path that fosters ethics in society rather than an Islamic state. The primary means to this path are education, to transform individuals and society, and dialogue, an open exchange, to improve relations between Muslims and other religious communities as well as the Muslim world and the West.

Madjid was a prominent advocate of democracy believing that democracy has Quranic precedents in Quranic and traditional Islamic notions of deliberation and consultation (musyawarah and shura). He insisted that religious pluralism and tolerance were not simply a theological issue but a divine mandate, rooted in Quranic passages (2:62; 5:69) that teach all believers will be rewarded equally in the next life. All religions are on par with Islam and God gives salvation to anyone regardless of his religion. So too, since all religions are committed to ethical values and social justice, all religions – not just Islam – have a role to play in the implementation of religious values such as social justice and democratic governance in politics and society.

Need for Secular State to be Muslim

Abdullah Ahmed An-Na’im (above), a prominent Sudanese-American Muslim scholar and human rights activist, has been a major voice on issues of Islamic reform, human rights and the secular state. He is the Professor of Law and Senior Fellow of the Study of Law and Religion of Emory University.

An-Naim is influenced by and draws heavily upon the ideas of Ali Abd al-Raziq as well as An-Na’ims own teacher, Mahmoud Mohamed Taha – both advocates of shariah reform and of a secular state that does not seek to impose any one interpretation of religious law as the law of the nation. Each suffered for their ideas; al-Raziq lost his teaching position at Al Azhar University and Mahmoud Taha was hanged by the Gafaar Numeiri government for apostasy.

The role of Islam in the modern state depends largely on the interpretation of the authority of the past. Abdullahi Ahmed An-Na’im argues in his book published in 2009, “Islam and the Secular State: Negotiating the Future of Shariah” that the coercive enforcement of shariah by the state betrays the Quran’s insistence on voluntary acceptance of Islam.

Just as the state should be secured from the misuse of religious authority, shariah should also be freed from the control of the state. State policies or legislation must be based on civic reasons accessible to citizens of all religions. He showed in his book that throughout the history of Islam, Islam and the State have normally been separate.

An’Na’im maintains that the ideas of human rights and citizenship are more consistent with Islamic principles than with claims of a supposedly Islamic state to enforce shariah. In fact, he suggests, the very idea of an “Islamic state” is based on European ideas of state and law and not shariah or the Islamic tradition.

An-Na’im explained that in making a claim that the state should be secular he means the state is neutral regarding religious doctrine, that it does not take a position on religion. He says the state cannot be religious.No matter how hard those in control of the state try, they will never achieve a claim of making a state religious because the state is a political institution it is incapable of having a religion.


He clarifies that whenever this claim is made what it means is that this is a political institution that is controlled by elites who are using the state institutions to enforce their view of religion. So the religious quality is of the ruling elite, not of the state as such. He says once this is recognised than it can be realised how dangerous it is to concede that the state is religious: “You don’t have authority unless I concede it to you. So if I do not concede to the ruling elite that they made a religious state by claiming it to be so, it is not religious.”

An-Na’im says; “As a Muslim I need the state to be secular so that I can be the Muslim I choose to be by conviction and choice”He adds: “There is no possibility of being a Muslim by coercion. You may be forced to conform to certain practices, certain lifestyles, dress style, but it never makes the religious quality of being a Muslim, unless it is by free and totally autonomous choice. So the pious intent to comply is integral to every religious act as a Muslim. The possibility of belief logically requires the possibility of disbelief. If I cannot disbelief, I cannot belief. Belief has to be a choice. It is totally incoherent to speak about a situation where I have no choice but to believe what I am made by others to believe.”

Na’im said his argument against an Islamic state or enforcement of shariah by the state is from an Islamic point of view but he is also aware that the idea, pushed by Islamic fundamentalists and other forces, of the Islamic state that enforces shariah, has been taken for granted. He says this idea is totally groundless and meaningless. He made this point in his book that the idea of an Islamic state is an extremely recent discourse. It has no precedent and it has no basis in pre-colonial Islamic history or intellectual tradition.
He says:

“It is totally premised on a European ideal of the state and a European ideal of positive law. The notion that the state can enact and enforce shariah as a state law is a colonial idea, a postcolonial innovation”

The Islamic Roots of Democratic Pluralism

Abdulaziz Sachedina is Professor and IIIT Chair in Islamic Studies at George Mason University. He has been a professor for more 33 years, He teaches Classical Islam, Islam in the Modern Age, Islam Democracy and Human Rights. In 1998, Grand Ayatollah Sistani issued a statement against Sachedina that advised Muslims not to listen to his talks or to ask him questions about religious matters.

In his 2007 book “The Islamic Roots of Democratic Plauralism” Sachedina argues that doors of religious interpretation must be reopened – to correct false interpretations, replace outdated laws and formulate new doctrines. His book critically analyses Muslim teachings on such issues as pluralism, civil society, war and peace and violence and self-sacrifice.

Sachedina’s basic argument is that the Quran provides a solid basis for shaping a pluralist, just and inclusive society. He analysed three core Quranic concepts: that humanity is one community; people of different religious backgrounds should compete among themselves to do good; and the necessity for compassion and forgiveness. Sachedina affirms that each of the three principles concerns not only personal convictions or morality, but also the need to establish an ethical public order consistent with Islam’s role as a “faith in the public realm”.

Sachedina takes on some of the most controversial issues in contemporary Islamic thought: the legal rights of non-Muslims (dhimmi) in a majority Muslim state, the rules regarding apostasy and retribution, and the practice of jihad and its relation to rebellion and martyrdom. Despite the fact that numerous examples of tolerance and legal flexibility exists in the Islamic community, nevertheless, he maintains, Muslim jurists formulated legal codes relating to the status of non-Muslims that allow for discriminatory practices. These laws are not in accordance with modern conceptions of pluralism and inclusiveness and therefore must be rejected: “Most of the past juridical decisions treating non-Muslims minorities have become irrelevant in the context of contemporary religious pluralism, a cornerstone of inter-human relations”

Sachedina relates apostasy and jihad to freedom of religion and forgiveness in Islam respectively. Both rests on the key concept of “fitra,” a human being’s natural predisposition towards justice and knowledge of good and evil. (“Fitra” according to Islamic theology, human beings are born with an innate inclination of tawhid (Oneness) which is encapsulated in the fitra along with compassion, intelligence, ihsan and all other attributes that embody what is human) This inherent morality reinforces a belief “basic to Muslim identity” that the divinely mandated vocation to realize God’s will in history is communal as well as individual. Fitra not only forms the basis of a “God-centered public order,” it also provides the key to interreligious dialogue because it speaks to the nature of all humans regardless of creed. Sachedina envisions, therefore an Islamic theology of religions for the twenty-first century in which law based on God’s revelation acts as an instrument of justice and peace in society.

Sachedina does not accept the type of religious state proposed by the fundamentalists in which Islam has an exclusive claim over authority in the community. Rather Sachedina argues that the Prophet laid the groundwork for a “universal community” that was subsequently corrupted by the political imperative to subdue people of other faiths and by a reading of traditional sources that lost sight of their original plural intent. By reclaiming the belief that all human beings are “equal in creation” the Muslim community can serve as a model of a religious faith that also calls for justness in society through the creation of pluralistic, democratic institutions.

Radical Reform: Islamic Ethics and Liberation

Tariq Ramadan is a Swiss academic, philosopher and writer. He is the professor of Contemporary Islamic Studies in the Faculty of Oriental Studies at the University of Oxford and Visiting professor to the University of Perlis, Malaysia. He was elected by Time magazine in 2004 as one of the 100 most influential people in the world and by Foreign Policy Magazine as one of the top 100 Global Thinkers.

In his book published in 2009 “Radical Reform Islamic Ethic and Liberation” he called for a radical reform and challenged those who argue defensively that reform is a dangerous and foreign deviation and a betrayal of the faith. Ramadan says the debate over the question of the renewal, revival and reform of Islamic sciences, and more specifically of “fiqh”, is a very old one among Muslim scholars. The awakening of Islamic thought necessarily involves reconciliation with its spiritual dimension on the one hand and on the other, renewed commitment to rational and critical thinking (ijtihad) of the scriptural sources in the field of law and jurisprudence (fiqh).

Authentic reform, he says, has always been grounded on Islam’s textual sources, spiritual objectives and intellectual traditions. Today’s Muslims, urgently need contemporary fiqh, distinguishing, what in the texts is immutable and what may be changed.

Similar to Nucholish’s argument, Tariq Ramadan says that literalists fail to distinguish between that which, in the Revelation, is immutable (thabit), absolute, and transhistorical, and that which is subject to change, linked to temporal evolution and environmental changes (mutaghayyir).

Tariq Ramadan asserts that by failing to distinguish between the immutable and the changing, contemporary literalist bestir a series of confusions involving grave consequences.Principles can be immutable, absolute and eternal, but their implementations in time or in history-historical models- are relative, changing, and in constant mutation. Thus the principles of justice, equality, rights and human brotherhood that guided the Prophet of Islam indeed remain the references beyond history, but the model of the city of Medina founded by Muhammad in the seventh century is a historical realization linked to the realities and requirements of his time.

Muslims must, in the course of history, try to remain faithful to those principles and strive to implement them as best as they can according to the requirements of their time, but they cannot merely imitate, reproduce, or duplicate a historical model that was adapted for a particular time but no longer corresponds to the requirements of their own.

To confuse eternal principles and historical models is simplistic and, most of all, particularly serious, idealizing something in a moment in history (in this instance the city of Medina) leads to thoughtless and guilty denial of that history and reduces the universality of Islam’s principles to the dream of an impossible return to the past, to an irresponsible “nostalgia of origins.”

The same temptation can be found in some contemporary salafi trends that advocate an almost exclusively political commitment: they reduce faithfulness to the message of imitating, or returning to, a specific historical political structure, a particular type of “state” or the reference to a “caliphate,” which they set against any other possible political organization (dismissively arguing that these alternatives arise from the era of ignorance or opposition of Islam, al-jahiliyyah).

The distinction between principles and models appeals to Muslims’ conscience and requires them to display intelligence and creativity to achieve, at each moment in history and whatever their environment, a society modelled as faithfully as possible to the ethical principles they adhere to. Whereas for literalists that act of being faithful to the Prophet, his Companions and the salaf essentially consists in imitating their behaviour and simply trying to reproduce their historical dated achievements.

Tariq Ramadan says essential faithfulness consists in recapturing their spiritual strength and intellectual energy to achieve the most coherent social model for our own time (as they did theirs.) The point is not to imitate the historical result achieved but to reproduce the ethical demand and human efforts through which it was achieved. It is not to repeat its form but to grasp its substance, spirit and objectives.

Amongst the ways is through ijtihad and maqasid al-shariah (the Higher Objectives of Islam.) It is necessary to think through and reconsider the list of principles and higher aims that can be deduced from the scriptures, the text and the Universe, to preserve what is good, beneficial and useful to the human race and to protect it from what is evil and harmful.

Liberal Democracy and Maqasid al-shariah and ijtihad

Anwar Ibrahim had from long ago spoken of the need for Ijtihad, maqasid al-shariah, tolerance and moderation. In his book “Asian Renaissance,” he said Islam came to Southeast Asia borne on the seas by Sufis and merchants rather than overland by soldiers brandishing swords, conversion was by choice, not coercion.

The peaceful and gradual Islamization has moulded the Southeast Asian Muslim psyche into one which is cosmopolitan, open-minded, tolerant and amenable to cultural diversity. Of course the outlook is also fashioned by the strong presence of people of other faiths who reciprocated Muslim tolerance. By being moderate and pragmatic, Southeast Asian Muslims are neither compromising the teachings and ideals of Islam nor pandering to the whims and fancies of the times.

On the contrary, Anwar says such an approach is necessary to realize the societal ideals of Islam such as justice, equitable distribution of wealth, fundamental rights and liberties. This approach is sanctioned in a saying by the Prophet of Islam, to the effect that “the best way to conduct your affairs is to choose the middle path” (Hadith narrated by al-Baihaqi).

Anwar said (at that time 1996-97) the proponents of the imposition of Muslim laws or the establishment of an Islamic state are confined to the periphery, Southeast Asian Muslims prefer to concentrate on the task of ensuring economic growth and eradicating poverty, instead of amputating the limbs of thieves. They would rather strive to improve the welfare of the women and children in their midst, than spend their days elaborately defining the nature and institution ideal Islamic state. They do not believe it would make one less of a Muslim to promote economic growth, to master the information revolution, and to demand justice for women. Nor do they believe it would strengthen one’s commitment to religion by instilling anxiety among people of other faiths.

However, Anwar warned even then, against the process of intellectual decline and decay that was and continues to gradually set into Islam. With the deterioration in economic activities over the centuries of colonial subjugation, poverty and destitution began to surface in Muslim societies. Patronage of learning, arts, and sciences suffered. As the level of learning declined, superstitions grew. The general public could no longer be counted upon to participate intelligently in societal processes as responsible and enlightened citizens.

Among the ulama, conservatism and rigidity began to take root in the face of external challenges and internal decadence. The doctrine of taqlid (uncritical imitation) was instituted. Innovation, change and inquiry became suspect. In such a climate, the ulama devoted themselves almost entirely to the issue of fiqh (jurisprudence) and limited study and commentary to the works of the great scholars of the classical era.

Serious problems which cried for urgent attention, including poverty, illiteracy and other forms of social malaise, were ignored. Islamic scholarship was confined to textual studies of language, traditions and orthodox jurisprudence. It became absorbed, not in the urgent task of championing the broad vision and civilizational ideals of Islam in the face of the onslaught of modern secular ideologies, but in attempting to unearth past solutions to resolve sometimes petty issues.

The effort to revive the spirit of inquiry and reasoned discourse (tajdid) required no less than a thorough transformation of mental outlook. To regain their central position in society, the ulama need to manifest intellectual vigour and societal relevance. They have to compete among the multifarious contending forces for the hearts and minds of the people. If a disproportionate number of ulama were to devote themselves entirely to jurisprudence, the other sciences and arts would be bereft of moral leadership. The issue of penal sanction of the shariah, for example, is a preoccupation of the majority of the ulama, although the mass poverty is more pervasive than criminality, and the suffering of the destitute and the hungry in so many parts of the Muslim world demands greater attention and compassion.

Muslims need to address urgent social and economic issues such as the eradication of poverty and illiteracy, the provision of employment, decent housing and other social amenities. These are preconditions before certain shariah injunctions can be translated into legislation. Indeed, the construction of an outer edifice of Islamic governance without the true substance of physical and spiritual well-being of the ummah would be a travesty of the maqasid al-sharia, the ideals and objectives of religion itself. It is tantamount to insisting on a form of religion devoid of substance.

Anwar ended with a caution that the wave of Islamic revivalism that began with the anti-imperialist struggles of the previous century had gained further momentum among Muslims in Southeast Asia. He had the prescience in 1996 to warn that the energy potential must be properly directed so as not to deteriorate or be corrupted into blind fanaticism which could precipitate into violent clashes with other cultures. He said there were indeed signs, however, that these religious energies, aligned with forces of social conservatism, have served to marginalize the Muslims in the rapidly changing world. Thus there is a need to reassert the universalism of Islam, its values of justice, compassion and tolerance in a world that is yearning for a sense of direction and for genuine peace. If this could be achieved, Muslims can truly contribute to the shaping of a new world.

Unfortunately, as we all know Anwar was incarcerated not long after “Asian Renaissance” was published. On his release he has continued to push for the ijtihad and the adoption of the maqasid al-shariah approach to bring the modern concepts of democracy, pluralism, tolerance and human rights as comparable to the universal values of Islam in his many talks, forums, seminars, local and international and in his public rallies.

His position did not waver despite his imprisonment. In an essay “Universal Values and Muslim Democracy” as Distinguished Visiting Professor in the School of Foreign Service at Georgetown University which draws upon his speeches at the New York Democracy Forum in December 2005 and the Assembly of the World Movement for Democracy in Istanbul in April 2006, Anwar in referring to the increasingly growing alienation between East and West over issues of freedom and justice, said he was reminded of his upbringing in multicultural and multi-ethnic Malaysia.

Malaysian psyche is infused with a plurality of identities. Malaysians study the Koran and the traditions of the Prophet Muhammad and at the same time devoured the works of Dante, Shakespeare and T.S. Eliot. There is never any doubt that our world and the West are compatible and the spirit of inclusiveness and pluralism will continue to be a source of inspiration in bridging the gaps between culture and civilizations.

Anwar called the “harrowing theories” concocted to claim an inherent contradiction between Islam and democratic values, are attempts to drive a wedge between two great civilizations. The argument that liberal democracy places sovereignty in the hands of the individual, in Islam sovereignty belongs solely to God, thereby reducing the individual to a mere agent with little concern for the exercise of creativity and personal freedom, is a misreading of the sources of religion and represents a capitulation to the extremist discourse. The proper view is that freedom is the fundamental objective of the divine.

Anwar wrote that the freedom defined by the West is the same in the maqasid al-sharia (the higher objectives of sharia):

“As articulated by the great jurists al-Shatibi (d. 790 CE), the maqasid al-sharia (higher objectives of the shariah) sanctify the preservation of religion, life, intellect, family and wealth, objectives that bear striking resemblance to Lockean ideals that would be expounded centuries later. Many scholars have further explained that laws which contravene the maqasid must be revised or amended to bring them into line with the higher objectives and to ensure that they contribute to the safety and development of the individual and society. Notwithstanding the current malaise of authoritarianism plaguing the Muslim world, there can be no question that several crucial elements of constitutional democracy and civil society are also imperatives in Islam-freedom of conscience, freedom of expression, and the sanctity of life and property – as demonstrated very clearly by the Koran, as well as the teachings of the Prophet Muhammad, perhaps most succinctly and eloquently in his farewell address.”

Anwar Ibrahim said the conclusion to be drawn is that human desire to be free and to lead a dignified life is universal. So is the abhorrence of despotism and oppression. These are passions that motivate not only Muslims but people from all religions and civilizations.

They have imprisoned Anwar again. However his spirit and his ideas remain free. His struggle for the inculcation of a culture of a plural, multi-ethnic, multi-religious society living in peace and harmony continues unabated.


Anwar and those Re-thinking Islam faces continuous challenges including assaults to their credibility, reputation, physical security and loss of personal liberty. They have spoken up with courage and fortitude that Muslims should not be concerned about an Islamic state ruled by shariah but to be in a state of Islam. For non-Muslims I urge you join this journey. It is not a journey to be taken by Muslims alone. We have to walk together in the search for greater cohesiveness, in fostering a better sense of community with shared values, in finding and articulating a common moral and ethical ground beyond mere tolerance. Then together we can confront corruption, authoritarianism, modern feudalism, bigotry, racism hatred and injustices. Only by moral fortitude can we have the courage of conviction to battle these iniquities as one.





World without debt

In Uncategorized on 26/01/2016 at 14:43


There is nothing Islamic in sukuk bond.  It transformed asset backed securities to issuer backed.  There is nothing more trustworthy for an Islamic nation that issued bond, than a Wall Street firm, like Lehman Brothers that print money to build asset backed securities.

Islamic finance is good.  A world without interest bearing debt is worth pursuing.  We do not know how.  But, it is a noble dream worth pursuing.  Until we figure how, we need to admit to the fact that there is little good in today’s sukuk bond.



Imagine a world without debt

By Edward Hadas
August 7, 2013

I have a dream: a world without debt, and with much more equity. It’s not just that summer holidays are a good time for fantasising. The fifth anniversary of Lehman Brothers’ bankruptcy is a month away, and regulators have recently forced both Deutsche Bank and Barclays to issue more shares.

Some regulators’ beach thoughts may drift to the magic numbers of bank capital ratios. My approach is less technical and more philosophical. I wonder why the financial system relies so much on debt. Loans and bonds are poorly designed for their primary economic purpose – investment.

This observation may sound shocking. Interest-bearing debt is considered totally normal. Financial theory unquestioningly treats risk-free debt as the standard instrument. Savers usually compare all investments to a similar standard: safe bank accounts which pay a steady interest rate.

But a little reflection on the real economy shows that the typical debt arrangement is an unfortunate holdover from a more primitive age. Loans are unnecessarily distant from economic reality. If we were starting now, we would never rely on such rigid instruments to fund investments.

To start, loans carry a maturity mismatch, because temporary debt funds permanent investments. Depositors can take money out of banks, banks can pull lines of credit and loans are supposed to be repaid or refinanced at maturity. But the factories the credit finances cannot then be unbuilt. The research cannot be undone and the people cannot be untrained.

The way that interest rates are usually fixed in advance is another problem. Unless both sides agree on floating rates, loans are bets on future inflation rates. Sometimes borrowers gain, sometimes lenders do, but either way a totally unnecessary risk is created.

The most important problem with debt is the so-called economic mismatch: the interest payments on loans vary much less than borrowers’ cashflows. Temporary difficulties can lead basically sound companies to skimp on economically valuable investments, or to default.

Banks are supposed to be able to absorb the losses from defaults. They charge riskier borrowers higher interest rates, a burden which makes default more likely. They also have a hierarchy for taking losses. Shareholders lose out first, followed by holders of subordinated debt. In most countries, the government comes to the rescue when losses get really large.

The arrangements are complicated and uncertain – thus the debate over how much capital banks need. The problem, though, is largely created by the duality of loans: either good or bad. If borrowers’ payments were more flexible – lower and higher depending on economic conditions – banks could have financial structures which were both simpler and sounder.

What is needed? Financial instruments which have no maturity, which are protected from inflation and which have variable payments. There’s nothing fantastic about that wish list. Common shares tick all the boxes.

Then why don’t common shares, or something like them, dominate finance? Well, the disadvantages of debt are clear, but it has one crucial advantage: a crude but clear duality. It is easy to tell whether counterparties are living up to the loan terms, so strangers can deal with each other relatively easily.

In contrast, equity only works if the companies that receive the funds can be trusted to make fair judgments on how much to pay investors. Within families and other tight-knit groups, the tug of loyalty and the desire to avoid shame promote the necessary honesty. Much more is needed for shares in enterprises run by strangers to be trustworthy: bureaucratic competence, effective governments and powerful auditors.

Today’s developed economies meet those requirements, but they still rely extensively on debt. The refusal to relegate this obsolete tool to the dustbin of history helps explain the peculiar vulnerability of modern economies to financial distress. With a more resilient financial system, it would not take more than five years to recover fully from the failure of a single big bank.

Indeed, with an equity-based financial system, leverage – effectively building large debt structures on small equity foundations – would be almost impossible. Instead of making unrealistic promises of safe nominal returns, banks would offer a plausible commitment of fair real returns. They would fail far less often than now, and far less spectacularly.

Common stock in its current form is not a suitable replacement for debt. Something new is needed; call it flexi-debt. Unlike shares, flexi-debt would not give funders voting rights. And while dividends on shares are discretionary, flexi-debt payments would be indexed – to GDP, income or some other objective variable.

There is many winters’ worth of work to be done before flexi-debt could replace standard debt. Education, financial design, law and experiment are all required. But stable finance need not be a pipe dream.

When even a Christian Professor wears her hijab

In Uncategorized on 22/01/2016 at 15:30


What say you?


Social Liberalism

In Uncategorized on 21/01/2016 at 16:01





Liberalism is the best Cure for Poverty – Dirk Verhofstadt

In his book World Poverty and Human Rights, philosopher Thomas Pogge states that �Despite a high and growing global average income, billions of human beings are still condemned to lifelong severe poverty, with all its attendant evils of low life expectancy, social exclusion, illiteracy and effective enslavement.� This growing gap is a danger. In his book Jihad versus McWorld Benjamin Barber explains this danger very sharp. �If justice cannot be shared equally, injustice will be imposed equally.� How can we reduce poverty and create welfare in poor countries? This is the central question of this Conference.

Today I want to make clear that liberalism can bring solutions to today�s economic and social problems. It is my firm conviction we need more liberalism to counter poverty. Stating we need more liberalism may sound astonishing. One may think that today�s globalization can be seen as liberal evolution. A lot of people believe that problems like poverty, inequality of income, unemployment, pollution and the disappearance of cultural diversity are the result of liberalism and free market economy. That is not correct. My statement is that today there is no liberal political awareness, that today there is no free trade, and that this is the reason why we are confronted with all those problems.

First of all I want to make clear what liberalism means. The term liberalism is often abused. Politicians like Ronald Reagan and Margareth Thatcher appealed to ideas from classical liberal thinkers but their political acts were everything but liberal. It is even the case today. Vladimir Zjirinofsky is the president of the Liberal Party in Russia but in fact he is an extreme nationalist. Jorg Ha�der is the leader from the Freedomsparty, but in fact he is a racist. Slavoj Zizek was presidential candidate for the Liberal Party in Slovenia but in fact he is a Marxist. These are only a few examples of people who act in the name of liberalism but they have nothing to do with it. At most they use or abuse certain elements of liberalism to give their own conservatism, nationalism, racism or egocentrism a smell of dignity and cultivation. But this is for me no reason not to use the term liberalism anymore. I want to keep liberalism – with al its outstanding social and human values – out of the hands of those who misuse it. For the same reason I resist to adjectives or additions as there are leftist liberalism, neo liberalism, libertarianism and so on.

Liberalism is based on individualism, another concept that often is misused. Some people say that individualism is the same as egoism but I could�nt disagree more. In fact, individualism is a special positive power allowing people to determine their destiny themselves. Individualism leads to self-development and emancipation. It is correct that individualism goes hand in hand with self-interest, but there is nothing wrong with that. Self-interest is the source of prosperity and development. However individualism is more than self-interest. It is a never-ending process towards liberty and self-fulfillment. For the citizen it is also a process of adaptation to social behaviour. Individualism is not an obstacle, but a condition for true solidarity. In his book On Liberty John Stuart Mill wrote: �Over himself, over his own body and mind, the individual is sovereign�. Starting from this definition, individualism may not be tempered, but on the contrary, must be encouraged, especially in those communities where people are suppressed due to religious, social or cultural traditions.

Here we come to the most important distinction between liberalism and the other ideologies. Only liberalism beliefs in individualism, in freedom and the autonomy of the individual. Therefore it stands against each form of collectivism, nationalism or traditionalism in which men are inferior to the community, the collective morality or the nation. It is clear that liberalism has nothing to do with socialism, conservatism or nationalism. Liberalism and individualism are without any doubt the most successful thoughts in history. They are the driving forces of anti dogmatic thinking. Liberal thinkers such as John Locke, Adam Smith and John Stuart Mill elaborated the importance of the individual and his freedom. But it was Immanuel Kant � the father of Enlightenment � who acknowledged very clearly the interest of individualism and liberal thinking. His central idea was �Sapere Aude�, �Dare to use your own sense�. He made clear that every human being is not a tool, but a goal. He defended the categorical imperative �Act only according to that maxim by which you can at the same time will that it would become a universal law�. In other words, each human being has the duty to care for his fellow humans.

During history, liberalism and individualism increased with lots of ups and downs. Think about the twentieth century. Think about nationalism and the First World War making humans suborbinate to the national community. Think about communism threating man as an object, a tool that could be switch on or off, used or throwed away. In order to achieve the ideal equalized society, communist leaders such as Stalin, Mao and Pol Pot drove millions of people into death. Think about Fascism making humans suborbinate to the will of the F�hrer. People who would not fit into the system were destroyed as happened with dissidents, phisical and mental handicapped persons, gypsies and jews. Think about fanatic religious communities in which people were submitted to holy texts. Even today millions of people, mostly women, are suppressed in the name of God or Allah.

Only liberalism fights this. The fight against nationalism, communism, fascism and religious fanatism. And the fight is successfull. With the impuls of the liberal aspiration for freedom and justice, universal human rights were accepted, abuses condemned, dictatorships eliminated. The idea that we are not born Belgian, German or American, but as citizen of the world with a number of untouchable rights and liberties. Since the sixties in the Western hemisphere, liberalism provided more freedom, allowing us to have our own lives more under our own control. 1968 was a crucial year. Some intellectuals consider May �68 as a failure, as an upsurge of leftist and rebellious youngsters who sympathized with collectivist ideas. Those who examinated this period carefull see that it meant the final breakthrough of individualism and liberal values throughout all strata of society. Look at the civil rights movement, the feminist movement and later on the gay rights movement. So many taboos disappeared during those years. Here lies the basis of secularization, the fall of the sociopolitical blocks, tolerance, rights of men, the equality of the sexes, antiracism and above all individual freedom.

During the past decades liberalism was also succesfull on the economic field. Until the eighties socialist parties and politicians supported collectivism, nationalizations and a greater impact of the state on the economy. That Keneysian thinking led to a fat state, an ineffective bureaucracy, a lack of creativity, high unemployment and huge depts. Such depts that in the next twenty years we and even our children will have to pay them off. Today most socialist parties transformed themselves into social-democratic parties and accept free trade as the best system to create welfare. Under impulse of liberalism Western governments stopped subsidizing loss-making branches of the industry like coal and textile. They slimmed down their bureaucraties. They abolished unnecessary rules. They privatized branches like telecom and aviation. They all became more orthodox on the budget. I realise that some of these transformations are to slow, that there are still to many bureaucratic rules and that we need more adaptations to keep our economies competitive. Social-democrats and conservatives are still in the grip of unions and other pressuregroups. They refuse or postpone necessary measures and forget that the best way to protect our social system is a good working economy. So we have to go on and convince others of the necessity of further liberal reforms in order to make the state more effici�nt.

Some even prefer to go much further. They not only want to remove the fat from state, but they also wish to dismantle the state, even in its most essential tasks. They call themselves neoliberals or libertarians. This leads to marketfundamentalism. In contrast to Karl Poppers warning that we may not accept dogma�s, they have a blind believe in absolute freedom, absolute property rights and in the absolute free market. Since the fall of the Berlin Wall and the thesis of the The end of historyof Francis Fukuyama, neoliberals and libertarians consider free market as a sort of scientific certainty. Liberals never followed this dogmatic concept because they understand that besides freedom also justice is necessary for a better society. Liberals never adored the absolute freedom because they know that absolute freedom frequently causes negative effects for fellow humans and the whole society. Liberals refuse to submit themselves to blind capitalism because extreme selfishness can hurt society and hamper opportunities for fellow humans.

Neoliberals and libertarians see the state as an ennemy. They reject the ideas of actual liberal thinkers as there are Amartya Sen, Fernando Savater, Hernando de Soto and Martha Nussbaum who prooved, each in their way, that a good organised state, with reliable education, an effici�nt social security and an effective legal system are necessary to give people the opportunity to live a fulfilling live. The notion �absolute freedom� is false. It�s like putting someone in the middle of the desert and saying �you are free�. There you are, without any protection, without drinking water, without compass. Ill, older and handicapped people need tools to practice their freedom. Children need reliable education to receive the knowledge and capacities to make their own descisions in their later life. People needs an effective legal system, not only for the protection of their property and personal rights, but also to protect their human dignity. As Martha Nussbaum says, an effici�nt state is necessary for people without �fundamental capabilities� to maximize their right on self-determination.

In fact there is a deep gap between liberalism and libertarianism. Libertarians narrow the liberal notion of justice to lawfullness. They hold a plea for a minimal state, only taking care of protection of propertyrights and acts against violence. Some of them even plea for no state at all. They want the privatization of everything, even jurisdiction. In any case they reject redistribution by the state. �Redistribution is a form of theft�, said Robert Nozick. The hungry, homeless and diprived people can not make an appeal to the government. Possibly fellow citizens can give something to the poor, but this is not an obligation and neither is it a task for the state. This leads to egoism, paternalism and the exploitation of fellow humans and nature. The libertarian ideas would lead to the dismantling of public services, such as education, social security and infrastructure. This is at right angles to the social and human values of liberalism.

Liberals don�t agree. For an open society, a week state can be as dangereous as an authoritarian state. Justice cannot be reduced to individual freedom and property. Every person has a duty towards his fellow humans. The sick, the elder and the handicapped may not be handed over to the �goodwill� of others. They must be helped by a system of redistribution. It�s the only way for all people to determine their own destiny. According to Kant the concept of freedom is hiding a duty: Du Kannst, denn Du Sollst. In contrast with libertarians, liberals realize that we have to support and help fellow humans, even if they do not belong to our society. Not alone out of charity but also structural. Trough an efficient state.

All of this seems theoretical, but hurricane Katrina made it real and so much clear. America knew long in advance about the impact of the disastre. On August 25 � four days before the disastre � the authorities were informed by scientists about the probable consequences of the hurricane. Nobody reacted. The federal government relied on the own capacity of citizens to face a hurricane. According to them it was not necessary to send extra doctors, nurses, policemen, firemen or bus drivers. When Katrina hit New Orleans on August 28, nobody was prepared. Presdent Bush stayed a few more days on holiday. Only five days later, on September 2, he visited the disaster area. Meanwhile thousands of victims were crying for help. What we saw on television was a powerless state leaving their citizens in the cold. Disastrous pictures which diserve only one classification: inhuman!

Katrina proved in one deafening bang the lack of state in the United States. Soldiers were not available because most of them were fighting in Irak. The budget to reinforce the dykes and the banks was cut back. Hospitals did not have the disposals for the necessary medication. Some tens of thousands refugees, including mothers with babies, children, senior citizens and sick people waited several days in the open air to rescue them from this nightmare. The lack of state was visible by the total anarchy in the abandonned city where looting became normal. The poor from New Orleans felt abandonned. I admit that the Bush administration does not follow the libertarian minimal or no-state ideas. Bush follows a neo conservative policy in ethical issues and a neoliberal policy in economic issues. Bush spend a lot of money for the war in Irak and the fight against terror, but he cut in public services like education, social security and infrastructure. By doing this he acted as an enemy of the state.

For liberals the state is not the enemy. They don�t want a fat state but an efficient state as a vital instrument to provide freedom, justice and protection. Liberals follow The Theory of Justice from the American philosopher John Rawls. He demonstrated that people are able to combine freedom and justice in a rational way. In order to come to an effective social justice Rawls uses a thought experiment. He starts from an initial position whereby people find themselves hidden under a veil of ignorance. He asks everyone to try and imagine how he would see social cooperation and distribution of means if he were to find himself in an original position not knowing whether he is rich or poor, black or white, man or woman, healthy or ailing, etc. Following this train of thought man will always take into account the potential situation in which he will necessarily have to appeal to the support of others. Freedom and justice are the keywords in liberal thinking. In his book The Law of Peoples John Rawls extends the idea of a social contract to the Society of Peoples and lays out the general principles that can and should be accepted by societies as the standard for regulating their behavior toward one another. So we come to liberalism as the best Cure fot Poverty.

Experts from IMF and the WTO � who follow the so-called Washington consensus � tell us that globalization will automatically lead to more prosperity in all countries opening their borders for unconditional free trade development. Anti-globalist movements pretend that globalization, as we know it today, will increase the existing problems in the lesser rich countries. Anti-globalists position themselves against a free market and in favor of a stronger grip on the national and international economies by governments. My perception is that both are wrong. Neither neo-marxist anti-globalists, nor neo-liberal market fundamentalists offer satisfactory solutions for less developed countries. Anti-globalists ask for new forms of nationalization, for subsidies and price controls. They claim to be the protectors of the poor while most of them protect particular interests. Most unions claim for more rules on multinationals. But by imposing high labor and environmental standards they extinguish the competitive advantages of small countries. On the other hand, market fundamentalists expect immediate and positive results from privatization and deregulation. They seem to forget that a free and liberal world means more than just economic freedom. Let me quote the Peruvian writer Mario Vargas Llosa: �development, the progress of civilization must be simultaneously economic, political, cultural, and even ethical�.

In his book In Defence of Global Capitalism the Swedish author Johan Norberg proved that countries implementing a free market develop more prosperity than countries protecting their markets, that economic freedom extends average life expectancy, that economic freedom fights corruption, that economic growth decreases poverty, that also poor people get a benefit out of growth and that progress is good for the environment. These are no fake allegations but reality. Countries opening up their borders to free trade are growing faster than those protecting their economy. Around 1820 poverty was spread fairly evenly throughout most countries. Then the industrial revolution took root, first in Great-Britain, later in Germany, and the other Western countries. It didn�t take long before these countries started to prosper. In the second half of the 20th century countries such as Japan, Taiwan, Singapore, Hong Kong, Malaysia and South-Korea joined the worldeconomy and reached a high level of welfare in a short period. Today China, Vietnam, India and Chile are catching up very fast. Only countries steering a protectionist course are lagging behind and are still experiencing widespread poverty. All these examples go against the predictions of antiglobalist theories. Norberg�s analyses not only unmasks the myth. It shows the potential for free trade to be a solution to many difficult problems in extremely poor countries. To make it clear: problems, correctly considered as important by antiglobalist movements can be fought by the system they refuse the most: a free market economy and a liberal democracy.

Liberalism does not mean that government should disappear for privatization. The efficiency of government is absolutely necessary for the creation of conditions and guidelines for fair competition between people and countries. Governments have tasks and responsibilities which cannot be taken over by private companies or organizations. If the goal is a free and fair society, politicians should pay attention to this and to five key elements: democracy, education, a real free market, right of ownership and international cooperation.

Democracy is essential for the freedom and development of mankind. A democratic legal order is the best system to maintain as much individual freedom as possible allowing access to prosperity for as many people as possible. The past has proven that the political systems supported today by most leftist antiglobalists are not efficient. One only has to remember the social, economical and ecological damages brought to ex-communist countries and to socialistic peoples republics. Democracy is the only system whereby rulers have to report to the representatives of the people. Their political continuity depends on the result of elections. In his book Development as Freedom the Indian Nobel Prize winner Amartya Sen found out that there is no famine in democratic countries. The most terrible famine-stricken period out of our contemporary history happened in China between 1958 and 1961. The result of the ruling planned economy implemented by the communist central government. 30 million Chinese died. From the beginning Mao refused to acknowledge this catastrophe, and continued to believe in his dogmatic rule. There was no democratic opposition, no freedom of press. The government was being mislead by the propaganda of local party officials who tried to save their job and disguised what was really happening. The essence of democracy is the presence of counterforce obliging political leaders to take up responsibility.

A second element is making education available to everybody. In my opinion, this is essential for further development of poor countries. Education, research and development are the real gates to the future. Developing countries need a labour force able to compete in the global economy � in skills and therefore in productivity. Better educated labour forces will encourage multinationals to invest more in poor countries. Personally I belief it is the government�s task to make sure that education reaches also the poor. Therefore I support public programs as Bolsa-Escola, a scholarship program for the poorest families. It allows their children to replace the hardness of working by the hope of learning in school. 20 million children benefited from Bolsa-Escola programs in Latin America in last years.

A third essential element is to impose a real free market. Liberals support privatization. But they do not accept that public monopolies are turned into private monopolies in order to enrich a particular industry, company or person. Liberals support deregulation. But they do not accept the law of the jungle, the exploitation of people or the dismantlement of a basic social protective system. Liberals support a smaller state, but don�t want the government to withdraw from all fields of public life. An efficient state is necessary to strengthen its legal system in order to protect property rights and contracts, to provide security and freedom, to fight monopolies, trusts, cartels and corruption. Most of the time liberalism never delivered prosperity, simply because in most countries liberalism never existed. The problems in the world are not due to too much liberalism, but to a lack of liberalism. The lack of opportunities for people in poor countries is, for the major part, due to protectionism in rich countries. Unions, employers organizations, agricultural confederations and their political friends consider their own interests more important than the public interest. Different from pressure groups – which in Europe are mostly linked to socialist or conservative political parties – liberals reject each form of protectionism.

The most important protectionists are the United States, the European Union and Japan. Every year they subsidize their economies with billion of dollars, euro�s and yens. They protect their own companies, they close their markets for import from poor countries and above all they allocate export subsidies to dump their over-production on to the world market. This policy of the rich countries is not liberal but protectionist. They do not implement a free market policy, they obstruct it. They apply import taxes on food, textile and steel, damaging other countries. Protectionism disrupts local markets in poor countries and keep local workers in poverty. Antiglobalists are wrong. Actually liberal free trade does not exist, only market disturbing protectionism. Protectionism is a continuing tragedy, causing unnecessary hunger and disease. According to Johan Norberg protectionism may lead to even bigger problems in the future. He says: �We in the West used to tell the developing countries about the benefits of the free market. And we promised wealth and progress would certainly come if they changed and adopted our ways. Many did, only to find that our markets are closed to them.�

A fourth liberal tool to reduce worldwide poverty is the attribution and protection of the right of ownership, especially in poor countries. During decades socialist thinkers explained and even fooled the poor by stating that collectivism and nationalizations would solve their problems, but it always failed. Peruvian researcher Hernando de Soto demonstrated that just this policy was pernicious for the creation of welfare. Millions of migrants established themselves in the slums around big cities, in the favelas, the bidonvilles, the shawnty towns. Automatically they enter a world without any official legislation. They have their own social rules, which in no means mean that they are not active. On the contrary. Nowhere else is there so much activity and entrepreneurship than among poor people. And poor people do not only work for and amongst poor people. They also fill gaps in the legal economy. They drive taxis without licenses, they take on jobs in hotels and restaurants. They do construction work. They take on jobs in illegal shops. This leads to De Soto�s surprising conclusion that the illegal or unofficial world is the norm. His conclusion is not only surprising but important: the poor are not the problem, they are the solution. Give the millions of people who lives in the slums the opportunity to convert their poor properties into economically usable assets. Give them the opportunity to start up a business easily. Simplify the acquisition of properties and estates. Property means economic potential. Bringing the poor into a legal environment would lead to an enormous accumulation of welfare. A multiple of all the development assistance. Does this mean we should stop development assistance? Not at all. We not only have the duty to help the poor, the sick and the older in our own societies but also the weak in the rest of the world. Money must be used more efficiently and end up with the people and not with corrupt regimes and their leaders. According to Amartya Sen, development assistance must go to education, health care and basic infrastructure of the poor state.

Finally we need more democracy in the international organizations. It�s absolutely necessary that the different regions in the world get more influence in world policy. The composition of the Security Council of the United Nations is not longer acceptable. As you know the US, Russia, China, the United Kingdom and France are the permanent members of this Council. We need a better balance and representation. Why can�t we accept a Council with one representative from North America, Europe, Africa, Russia, the Arabic world, China, India, South East Asia and Latin America? Representatives of the different regions in the world should also be involved in other international organizations such as the World Bank, IMF and WTO. Today those organizations work to much as an extension of the economic and financial interests of the United States and Wall Street.

To conclude I would like to give my opinion about a case in which liberals should take the lead for the benefit of millions of poor and unprotected people. I am talking about the further enlargement of the European Union and the candidacy of Turkey. According to my Kantian way of thinking and my plea for individualism my concern does not go to Turkey as a country. My concern goes to the individual Turk, to the individual Kurd, to the individual Armenian, and so on. My concern goes to individuals who hope for a better future and especially for the final protection of their rights and freedoms in the European jurisdiction. As Europeans and citizens of the world we have the duty to give those people a perspective. The perspective to enter into the great European family in a few years. A family in which their children will find peace and welfare.

I realize that the European Union needs urgent deepening, a more transparent and democratic way of acting. But this cannot be an excuse to draw a final line. The European Union is not based on a common language, religion or history. It came from the free and resolute will from people who understood that we could only maintain peace by connecting our destiny and by sacrificing small pieces of our national sovereignty to a higher interest. Democracy, human rights and a free market economy are the common values of it. In this sense Europe is a universal project. Let me quote Jean Monnet, one of the Founding Fathers of the European Community: �We are not forming coalitions of states, we are uniting men�. The shortage of a clear and common identity is not a lack but on the contrary an advantage. This is an important difference with European nationalists and conservatives who wish to keep the historic �Avondland�. They frighten people and plea for a return to the classic nation states. The worst thing we can do with regard to the Turks, but also to the Bulgars, the Roumanians, the Ukrainians, the White Russians and so on, is definitely closing the door and blowing up all perspectives. It is my personal conviction that the absence of perspective is the breeding ground for fanaticism and terrorism. As long as people have a perspective, they have hope and turn away from extremists. Take away any perspective and you give fanatics the possibility to spread their pernicious ideas.

The title of one of my books is Human Liberalism. It elected immediately the question if there is something like �inhuman liberalism�. I don�t believe so. I wanted to make clear that in liberalism the human being stands central and nothing else. Not profit, not the economy, not the state, not the nation, not a race. Only the human being and his freedom to make his own choices. We need more liberalism, more concrete measures leading to more freedom, more emancipation, more opportunities for the individual, more welfare for fellow humans here and in the rest of the world.

Dirk Verhofstadt

Dirk Verhofstadt


Lecture from Dirk Verhofstadt at the Conference on Development in Brussels, October 17, 2005