A Perspective With Humans At Its Centre: Islamic Economy
We talked to Abdurrahman Kaan, President of MUSIAD, about the Turkish economy and participation finance system.
We talked to Abdurrahman Kaan, President of Independent Industrialists’ and Businessmen’s Association (MUSIAD) about Turkey’s role in the economic balances expected to change after the novel coronavirus (COVID-19), the manufacturing potential of the Turkish economy, and the association’s opinions on the participation finance system. Kaan describes the participation finance system as “an economic model that does not feed on an exploitative understanding based on greed for income but rather on an understanding that takes humans at its centre based on the principle of fair distribution.
IT IS NOW SAID THAT THE GLOBAL ECONOMIC BALANCES WILL BE CHANGED AFTER COVID-19. AS THE PRESIDENT OF INDEPENDENT INDUSTRIALISTS’ AND BUSINESSMEN’S ASSOCIATION (MUSIAD), ONE OF THE LEADING ASSOCIATIONS IN THE TURKISH BUSINESS WORLD, WHAT DO YOU THINK TURKEY’S POSITION WILL BE IN THIS CHANGE? IS THE BUSINESS WORLD READY FOR THIS CHANGE?
All large-scale economic crises in history have caused severe ruptures in the global economy. We can look at history for reference to that; both after the Great Crisis of 1929 and the Financial Crisis of 2008, the global economy sought a new order. Putting the global economy substantially into a shock in terms of both supply and demand and bringing the capital, goods, and human mobility almost to a halt, the COVID-19 crisis has dragged the global system into a deep uncertainty not just economically but politically and socially as well. And we must read the period well and see that this crisis came at a time when the Euro Zone was in a deep bottleneck for a long time, Japan could not come out of its recession, other BRICS countries fell way behind China’s dynamism, and the global trade was contaminated by the China-US tensions.
In an environment like this, it would not be possible for the leading actors in the fight for the global hegemony to keep Turkey out of all this and keep their share of the pie. The growth rates for the third quarter of the year also show how Turkey stands out in a positive way from the leading actors of the global economy in the fight against the COVID-19 crisis. With the most successful growth performance among G-20 countries with a 6.7%, Turkey’s place in the post-crisis global economic system will be much better than before.
TAKING INTO ACCOUNT THE DEMOGRAPHICS OF THE COUNTRY, COULD YOU GIVE US YOUR EVALUATIONS ON THE MANUFACTURING POTENTIAL OF THE TURKISH ECONOMY? DO YOU THINK WE USE THIS POTENTIAL TO ITS FULLEST EXTENT? IF NOT, WHAT CAN BE DONE ABOUT THIS?
Turkey can be a great manufacturing base with its existing manufacturing potential, flexible manufacturing capacity, cheap labour, and proximity to big markets. Indeed, we have had a breakthrough in the service sector in recent years and we think that the manufacturing industry has the same significance for the Turkish economy. In this respect, our country’s existing manufacturing scale can be used as a great competitive advantage after the COVID-19 crisis. Of course, we must prepare the manufacturing industry for the medium to long term transformation process imposed by COVID-19 in order to reflect our potential to the field to the fullest extent. We have an opportunity area now and we can use it to develop our R&D activities, innovation capacities, and labour force and have a serious breakthrough in the global economy in the long term. We should go further in our efforts in the production-trade-investment triangle in the new period and concentrate on production for export.
WE WOULD ALSO LIKE TO LISTEN TO YOUR OPINIONS ON THE PARTICIPATION FINANCE SYSTEM. WHAT COULD YOU SAY TO THE TURKISH BUSINESSPEOPLE ABOUT THIS SYSTEM?
At MUSIAD, we have a motto that we like to repeat any chance we get, this time I will say it via Katılım Finans: What is humane is Islamic, and what is Islamic serves people. Islamic economy does not feed on an exploitative understanding based on greed for income but rather on an understanding that takes humans at its centre based on the principle of fair distribution. The dominant economic system produces money instead of goods. Not just money, it is completely based on interest. In doing so, when we think about all economic activities that are based on money by considering the time value of money, we ignore two other markets of the economic activities: labour and raw material, humans and production in other words. Participation finance system has been breaking this cycle now. Our goal in the participation finance system is to build a system upon goods and services instead of money and interest. It will not completely destroy the finance system but open a new path in this otherwise blocked line. Instead of blowing up an imaginary balloon by ignoring the concepts such as funding needs, valuation, or time value, participation finance aims to bring a new perspective on the fundamental concepts of the economy by taking humans at its centre.
YOU SAID THAT “ISLAMIC FINANCE IS AN ALTERNATIVE NOT JUST FOR INVESTORS IN THE ISLAMIC WORLD BUT FOR OUTSIDE ITS SCOPE AS WELL.” COULD YOU ELABORATE ON THAT FURTHER?
Based on our belief that everything that falls under the Islamic philosophy serves people, we say that Islamic finance creates an important opportunity area not just for the Muslim population but for other investors outside its scope. Because with the opportunities it provides for resource allocation, income distribution, social justice, and protection of personality, Islamic finance is a tool that can benefit not only the Muslim population but the whole humanity as well. For this reason, we believe that we should make more use of the basic principles of the Islamic economy to increase the welfare of the world community and to establish peace on a global scale. As you know, the freedom granted to capital in the modern financial system is not given to labour. And this prevents the fair distribution of benefits and damages. This way, while the benefits are usually obtained individually, the damage and losses caused by the system can be felt by the general public. In this context, Islamic finance foresees the distribution of benefit and harm among individuals and society in a much fairer way and we believe that it offers an alternative solution not only for the Islamic world but for all humanity.
Interview: Serdar Ergün