Abdur Rahman ibn Yusuf Mangera – Prophet Muhammad The First Capitalist Part 1 . Benedikt Koehler

Abdur Rahman ibn Yusuf Mangera
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The speakers discuss the history and meaning of capitalism, including the use of capitalism as a financial instrument and the concept of "immediate capitalism" used by many people. They emphasize the importance of understanding one's mentality and outlook for future success, as well as the history of the Islamic economy and its importance in shaping society. The segment concludes that capitalism is a reflection of the economy and provides examples of early Islamic innovations.

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			I'd like to give you an
introduction of learning about
		
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			learning about finance as a Muslim
student. And I'd say it's divided
		
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			into two things. The first thing
is that interest is not allowed.
		
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			And the second thing is that you
have to give 2.5% in the form of a
		
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			charity tax every year. And that's
pretty much where it stopped. I
		
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			was speaking to Dr. Benedict
earlier on. And he mentioned that
		
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			after he first wrote an article to
do with Islam and capitalism, they
		
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			asked him to do it again. Because
simply the literature just isn't
		
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			there.
		
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			And slowly, as you start to
discover the realities of what is
		
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			some offers, it's a lot more than
what we seem to think, you know,
		
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			there is a whole financial
dynamic, whole financial world,
		
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			actually. And we'll refer to both
both speakers, as I was speaking
		
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			as well to remove the decline in
the use of earlier on.
		
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			Islam is a it's a very holistic
religion.
		
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			And it tackles finance, a lot more
than we seem to think. At the
		
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			moment, I'm writing my
dissertation on an economic
		
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			analysis of principles in Islamic
finance. And one thing I've come
		
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			to realize is that there is a lot
more, without any further delays,
		
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			Dr. Benedict Koehler completed his
BA in history, from the University
		
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			of Yale before doing an MSc from
City University, and then a
		
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			doctorate in philosophy from the
University of Toledo. Dr. Mandel.
		
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			Good evening, ladies and
gentlemen.
		
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			Well, my talk is about capitalism,
and what Islam has to do with it.
		
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			So that's about two different
things, capitalism, and about
		
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			Islam. And I've been asked, first
of all, to speak a bit about
		
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			capitalism, because you don't want
to have a talk about Islam and
		
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			then finding out at the end,
actually, we don't see that
		
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			connection to capitalism. So let
me start talking about capitalism.
		
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			Capitalism, in itself is a very
big word. And we use it all the
		
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			time and all sorts of connections,
and cotton has all sorts of
		
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			connotations. In fact, this is one
of the problems I have with people
		
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			talking about capitalism.
Capitalism is used in so many
		
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			connotations. You don't really
know what it means anymore,
		
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			because it seems to apply to
variously. Anybody who's doing
		
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			business, anybody who invests any
market,
		
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			long distance trade, big
corporations. And I could probably
		
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			think of a couple of other things.
The term capitalism now covers so
		
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			much that it seems to be coming to
overlap with the term economics
		
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			generally. And I have a hard time
figuring out, well, if capitalism
		
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			envelops everything in economics,
it's really a meaningless term,
		
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			and we don't need it anymore.
There's got to be a bit about
		
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			capitalism that makes capitalism
different from economics, when
		
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			it's not capitalist.
		
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			So there are four people, in my
opinion, who told us about
		
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			capitalism, and what doesn't make
it different from economics
		
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			generally. And I would like to
touch on those one by one there,
		
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			Adam Smith, Karl Marx, Max labour,
and Friedrich von Hayek.
		
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			Now, it's one of the problems when
people speak about capitalism, and
		
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			say that it existed always, is
that the first person that we
		
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			associate with as being an
economist of capitalism, is Adam
		
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			Smith, who wrote in the 18th
century. So that's about 250 years
		
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			ago. Until then, it seems nobody
knew about capitalism, but it
		
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			would have existed. But finally,
in 1776, there's Adam Smith, he
		
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			writes The Wealth of Nations. And
now we have capitalism. And what
		
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			are one of his key insights? There
were many others. But one of those
		
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			is that he said, Well, capital
markets are guided by an invisible
		
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			hand, by which he meant that you
don't have a government saying
		
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			what prices should be, you don't
have any authority, saying, who
		
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			should produce what, you don't
have an overall plan for the
		
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			economy, you have what he called
the invisible hand. And the
		
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			invisible hand is the multitude of
individuals, all of us here with
		
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			our wants and needs and our
supplies, who meet up and the
		
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			market sorts it all out. And
that's how production tends to
		
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			those and gravitates to those
services and products, which
		
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			people want most. That's the
invisible hand.
		
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			But, Adam Smith, if you look for
the word capitalism, and Adam
		
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			Smith, you won't find it, he never
used it once.
		
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			So let's move on to the second big
important person, Karl Marx, Karl
		
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			Marx, everybody tends to associate
with his biggest book, which is
		
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			about copy talk. So he wrote about
capital, he had that notion that
		
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			in a capitalist society or in any
society, there is a concentration
		
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			of capital, and that capital is
used. And those people who have
		
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			that capital exploit people who do
not have any capital, and really
		
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			said Karl Marx, history is a
sequence of struggles over
		
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			capital.
		
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			So that's what he said is, is
capitalism
		
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			And
		
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			that's how we would see it. Now,
his, his analysis is about
		
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			capitalism. But if you read Karl
Marx, you'll have a hard time
		
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			finding the word capitalism,
because he does use it maybe half
		
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			a dozen times, but never in the
way we use it. Now, it's
		
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			incidental, it appears in a couple
of sentences. So he didn't really
		
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			use capitalism.
		
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			Now we get to the 20th century.
And there you have the person who
		
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			put the ISM into capitalism, that
was the founder of sociology, Max
		
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			viva. Now, what did Max Viva do?
And what did Max Viva right? That
		
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			makes him so different from Adam
Smith, and from Karl Marx. What
		
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			makes him different is that he
said, capitalism is a very
		
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			particular way of organizing a
society.
		
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			It's a society where people who
engage in investment and engage in
		
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			commerce,
		
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			have a very high social status and
become role models. And because
		
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			they become role models, whatever
they do, tends to become formative
		
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			for society.
		
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			That's his sociological approach.
Capitalism isn't just about how
		
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			you do business, and then you go
home and do something else. He
		
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			says, capitalism is about how you
do business. But when you go home,
		
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			you are still living the way a
capitalist does. So to understand
		
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			capitalism, you have to understand
the way of life, the mentality,
		
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			the outlook. And then he went on.
And he said, Well, where does that
		
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			outlook come from? Well, what
capitalists do, they're very
		
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			rational people, they plan, they
look ahead, they delay having fun
		
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			right now in favor of doing some
really hard work, but it helps
		
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			them have more fun at some later
point in the future. So it's an
		
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			entirely sober lifestyle that
looks to the future, and looks to
		
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			rewards by accumulating material
goods.
		
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			And that attitude didn't exist in
history from the very beginning.
		
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			It came about at a very particular
moment, it came about with the
		
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			rise of Protestantism.
		
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			Because Protestants have this
attitude of being very sober and
		
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			of having the attitude of going to
bed early and Early to bed and
		
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			early to rise makes a man healthy,
wealthy and wise. And once that
		
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			attitude became formative for
society, then you have the mindset
		
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			that creates capitalism. That was
a very convincing theory. So
		
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			everybody thought, well, now it's
an open and shut case. But
		
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			somebody discovered a tripwire
because they said, Professor V.
		
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			But this makes a lot of sense,
what you're describing about a
		
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			capitalist society, we buy into
all of that. But the thing is,
		
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			everything you described already
existed in the Middle Ages, in
		
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			places like Venice and Genoa,
because they were ruled by
		
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			merchants, and they did a lot of
investing, and they got rich that
		
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			way, and that shaped their
society. But in Venice in January
		
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			in the Middle Ages, they didn't
have any Protestants. So can you
		
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			please explain that. From then on,
the reputation of Max Veva started
		
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			to nosedive, because people
thought the first bit of his
		
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			theory works, but the it doesn't
really match the empirics.
		
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			I now get to the next person who
brought the study of CAP took the
		
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			study of capitalism to the neck
took it to the next level,
		
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			Friedrich von Hayek. High IQ was
somebody who said, I agree with
		
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			most of what my predecessor
economists have said. But there is
		
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			something about a society that's
capitalist that makes it different
		
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			from any other society. But what
makes it really different is that
		
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			it has its essence or its center,
its core
		
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			in the market.
		
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			So now a new approach, which has
become dominant, came to the fore,
		
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			which is to think of capitalist
societies as market economies.
		
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			And like viva, he said, well, but
a market economy is one where you
		
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			not simply go to the market and
buy and sell without anybody
		
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			stopping you from doing that. But
you also then go home and because
		
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			that's what you did during the day
and it shaped your working life,
		
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			it shapes the rest of your life.
		
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			That has become a theory which
became dominant because it was
		
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			capable of explaining many, many
social phenomena that you observe
		
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			in capitalist societies, you
associate a society that is based
		
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			on markets with one that is very
innovative, that is
		
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			entrepreneurial, and that is
progressive and open to new ideas.
		
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			Hyack for many decades, well for
several decades, was not at the
		
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			forefront of economic debate, but
he then rose to significant
		
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			popularity when his views were
taken on by the then Prime
		
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			Minister Margaret Thatcher. So
hierarchy and economics
		
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			And Thatcherism often is seen hand
in hand. But his legacy is to say
		
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			that there is such a thing as the
market, there is such a thing as a
		
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			government. But the two don't
really get along very well. And a
		
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			market squeezes out governments
and the market and the government
		
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			squeezes out markets, but there is
a tension between markets and
		
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			governments.
		
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			So that's where I'm coming from.
When I talk about capitalism, I
		
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			adopt the views of those key
thinkers. In my view, Max Weber
		
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			and Friedrich Hayek, capitalism is
a way of life. It's a way of
		
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			approaching how society is
structured. And it thinks of a
		
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			capitalist society as one that has
the market as its core social
		
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			activity, and that core activity
ripples outward to all other
		
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			social phenomenon.
		
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			So, so much for capitalism.
		
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			Now, what's Islam got to do with
that?
		
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			When you talk about capitalism,
you tend to think about big
		
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			cities, big companies, big
department stores, luxuries,
		
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			skyscrapers and so on. Why? Why do
I claim capitalism began in
		
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			Arabia, specifically with Islam?
Well,
		
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			the makings were already there
before Islam came into being they
		
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			were already there during the Age
of Ignorance during Jamelia. Why
		
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			do I say that? Well, because Arabs
at that time, were very unique,
		
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			were unique for in two particular
respects. They didn't have a
		
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			government. And they were
worldwide traders, Arabs, already
		
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			long before Mohammed was born,
we're trading in distant places as
		
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			far away as China, and transfer
and taking goods and transporting
		
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			them to Europe. So right there,
you have something in the jar
		
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			Helia, which Hyack would have been
very sympathetic to. It's not the
		
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			absence of the government, which
he thought would be a problem, he
		
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			would actually like that because
if there is no government to
		
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			enforce the way people live,
people have to find ways how to
		
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			get along with each other on their
own.
		
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			And the second is, it was a
society which lived off trading
		
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			and taking goods from one part of
the world to another. So they were
		
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			very outward looking, and they
were accustomed to living in
		
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			different legal frameworks that
made Arabs in the Jahai Lea very
		
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			different.
		
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			So let's move on to a particular
city in Arabia to Mecca. Mecca was
		
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			one of the cities in Arabia in the
GI Lea that was a center for
		
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			devotion and for for pilgrims. And
when those pilgrims congregated
		
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			and convened in Mecca, they had an
opportunity to trade. So religion
		
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			so pilgrimage and trade,
		
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			developed, side by side in Mega
long before Mohammed was born.
		
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			It started to take off especially
around the middle, mid fifth
		
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			century, when, when a certain
cause I started to build
		
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			a protective wall around the Kaaba
and said From now on my tribe Kool
		
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			Aid, we are going to manage this
place. And it continued growing,
		
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			and kosai had his had many, many
descendants. And they branched out
		
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			into different families. And some
of them were very distinguished.
		
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			Commercial diplomats, one might
say in their own right. One of
		
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			those was a man whose name is
known because people generally
		
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			refer to Hashemites as an
important branch of our of our
		
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			clans. And that was their, the man
who gave the name to Hashemites,
		
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			Hashem. Hashem was someone who did
something that was then very new.
		
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			Not only did he go and travel
across deserts heading at the head
		
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			of caravans, what he did was,
right. Trade was he was a
		
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			commercial diplomat who wrote
trade treaties with the heads with
		
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			of tribes through whose areas he
traveled, and it went something
		
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			along the lines like this. He
said, Listen, guys, instead of you
		
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			giving instead of you trying to
ambush us, why don't we have an
		
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			agreement here, you give us some
of those goods that you would like
		
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			to see sold on the atom in the
Mediterranean, we'll take them to
		
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			the Mediterranean, sell them and
when we get back, we'll split the
		
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			profit. How does that sound, saves
you a lot of trouble and saves us
		
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			a lot of headache and we all it's
a win win situation. And these
		
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			agreements were called the elf.
The elf were very important
		
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			because they did something
coincidentally, which the Haram in
		
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			Mecca already did. They created a
particular area where you that was
		
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			that guaranteed personal property
and pursuit of trade. So Hashem
		
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			was another very important person
to get after kosai.
		
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			By the time Mohammed was born,
Mecca was already a thriving Trade
		
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			Center and caravans going from on
the laughs from Mega comprised as
		
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			many as two and a half 1000
camels. So these were pretty big
		
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			businesses that were with division
of responsibilities, which were
		
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			already entrained at the time
Mohammed was born. Now Mohammed
		
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			will
		
00:15:00 --> 00:15:05
			was born for an orphan. His father
was a caravan trader, and he who
		
00:15:05 --> 00:15:09
			had died while his mother Amina,
was expecting Mohammed. So he
		
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			died. So he, he died at a time
when he did not yet have very much
		
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			money and Mohammed didn't have
grew up a poor kid.
		
00:15:18 --> 00:15:21
			But Mohammed had certain
immaterial assets, because he was
		
00:15:21 --> 00:15:25
			a direct descendant, of course, I
and Hasheem. So he came from a
		
00:15:25 --> 00:15:30
			family that had, for several
generations been distinguished as
		
00:15:30 --> 00:15:35
			caravan traders and as commercial
diplomats. When he grew up, he
		
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			started out as a shepherd. But he
didn't stay a shepherd. His uncle
		
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			Abu Talib arranged an introduction
for him to find someone investing
		
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			so that he too could be a caravan
trader, which he did around the in
		
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			his early 20s. And in his mid 20s,
he married the person who was his
		
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			investor had the job.
		
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			They were married for, I think,
about 25 years. So Mohammed, who
		
00:16:00 --> 00:16:04
			came from a commercial diplomatic
family, who came from a family of
		
00:16:04 --> 00:16:09
			caravan traders, married a caravan
investor, and for a long, long
		
00:16:09 --> 00:16:12
			time had day by day exposure to
the mechanics of investing in
		
00:16:12 --> 00:16:16
			caravans. Now just for a moment,
let's just look at these caravans
		
00:16:16 --> 00:16:21
			I already said, They comprise say,
two and a half 1000. camels. When
		
00:16:21 --> 00:16:24
			you have two and a half 1000
camels setting forth, there's a
		
00:16:24 --> 00:16:28
			lot of organization that needs to
go on, somebody has to decide when
		
00:16:28 --> 00:16:31
			they leave, you can't have a
couple of camels leading first
		
00:16:31 --> 00:16:34
			leaving first and a couple the
next day, and so on. If you want
		
00:16:34 --> 00:16:37
			to organize it so that they're
secure, you want them all to leave
		
00:16:37 --> 00:16:40
			on the same date. For that to
happen, everybody has to equip
		
00:16:40 --> 00:16:44
			those camels by a certain date.
For that to happen, production and
		
00:16:44 --> 00:16:48
			supply has to be organized. So you
have a vertical supply chain,
		
00:16:48 --> 00:16:50
			which has to be organised in that
particular in the city.
		
00:16:53 --> 00:16:56
			You also have something which is
very important for the development
		
00:16:56 --> 00:17:01
			of capitalism. Somebody needs to
put up the money for this, because
		
00:17:01 --> 00:17:04
			you have to pay salaries, you have
to buy camels, and you have to
		
00:17:04 --> 00:17:08
			make sure that those people who
made money by selling and still
		
00:17:08 --> 00:17:12
			wait for the cat for the caravan
to return. What you need is
		
00:17:12 --> 00:17:14
			somebody to underwrite the risk.
		
00:17:15 --> 00:17:20
			So already in, in the days of
Muhammad, you had what we would
		
00:17:20 --> 00:17:24
			now call a capital market. You had
some people who managed caravans,
		
00:17:24 --> 00:17:28
			some people who were staffers on
caravans, some people who supplied
		
00:17:28 --> 00:17:32
			the goods that caravans would
sell, and some people who invested
		
00:17:32 --> 00:17:36
			in them. And one such investor was
the wife of Muhammad Khadija
		
00:17:38 --> 00:17:42
			when Mohammed then discovered his
vocation and became became a
		
00:17:42 --> 00:17:48
			prophet is first convert was his
wife Khadija. So in Islam, you
		
00:17:48 --> 00:17:51
			have something that's very unusual
for a religion, you have a
		
00:17:51 --> 00:17:55
			religion where the prophet was an
entrepreneur, and were the first
		
00:17:55 --> 00:17:59
			convert was a female venture
capitalist. But that does not
		
00:17:59 --> 00:18:02
			explain what Islam has got to do
with capitalism, that could just
		
00:18:02 --> 00:18:03
			be coincidental.
		
00:18:05 --> 00:18:10
			What happens that what the trigger
the tipping point for capitalism
		
00:18:10 --> 00:18:14
			was after Mohammed emigrated to
Medina, and started to put his
		
00:18:14 --> 00:18:18
			vision of an ideal society into
practice. There were many aspects
		
00:18:18 --> 00:18:22
			of his reforms. But I'm just going
to stick to two in particular,
		
00:18:23 --> 00:18:28
			those two relate to market
practices. The first is that
		
00:18:28 --> 00:18:33
			Mohammed started a market in
Medina. And when he started the
		
00:18:33 --> 00:18:38
			market, he announced to his
community, this is your market.
		
00:18:39 --> 00:18:43
			And then he added something which
was really key, and let there be
		
00:18:43 --> 00:18:48
			no tax on it. So he started a
market. That's not unusual, but he
		
00:18:48 --> 00:18:53
			started one that was tax free. So
here you have something that's
		
00:18:53 --> 00:18:57
			economic policy, that's fiscal
competition. He's inducing trade
		
00:18:57 --> 00:19:00
			and attracting trade to his
particular market through fiscal
		
00:19:00 --> 00:19:01
			incentives.
		
00:19:03 --> 00:19:08
			And there's a second step, that he
that is critical, and that is even
		
00:19:08 --> 00:19:12
			more, that's a seminal importance
in the history of economic
		
00:19:12 --> 00:19:12
			thinking.
		
00:19:14 --> 00:19:17
			This occurred at a time when there
was a famine in Medina. And as was
		
00:19:17 --> 00:19:23
			customary in at the time, people
would expect authorities to fix
		
00:19:23 --> 00:19:25
			prices for food necessities.
		
00:19:28 --> 00:19:31
			I should say that it was customary
at the time and markets all over
		
00:19:31 --> 00:19:35
			the middle Middle East for people
in charge of communities to fix
		
00:19:35 --> 00:19:36
			prices for daily necessities.
		
00:19:38 --> 00:19:41
			But Mohammed on this occasion,
when people appeal to him and
		
00:19:41 --> 00:19:44
			said, Look, our budgets are being
squeezed because food prices are
		
00:19:44 --> 00:19:45
			going up.
		
00:19:46 --> 00:19:51
			On this occasion, he didn't do
what his adherence hoped he would
		
00:19:51 --> 00:19:57
			do. He didn't set prices. On the
contrary, he said, prices are in
		
00:19:57 --> 00:19:58
			the hands of God
		
00:20:00 --> 00:20:03
			fixing a price was something which
he specifically excluded from his
		
00:20:03 --> 00:20:08
			remit as leader of the community.
This was, in my opinion, one of
		
00:20:08 --> 00:20:11
			the seminal statements in the
history of economic thought. I
		
00:20:11 --> 00:20:15
			mentioned earlier that Adam Smith
said, markets are managed or are
		
00:20:15 --> 00:20:22
			guided by an invisible hand. Well,
Mohammed said that in Medina at
		
00:20:22 --> 00:20:26
			the time, much earlier, and
introduced this not as a
		
00:20:26 --> 00:20:30
			theoretical concept, but as a
practical policy guideline.
		
00:20:31 --> 00:20:35
			So this was, so these two steps
alone, and there were there was a
		
00:20:35 --> 00:20:39
			whole raft of others of other
steps led to the creation of a
		
00:20:39 --> 00:20:43
			capitalist market. Why do I call
that a capitalist market? I just
		
00:20:43 --> 00:20:47
			want to reiterate that a society
there where governments do not
		
00:20:47 --> 00:20:51
			intervene in entrepreneurs who
engage in market market practices.
		
00:20:53 --> 00:20:57
			Now Mohammed died, and one of the
things he said that you can find
		
00:20:57 --> 00:21:00
			that he predicted that you can
find in a society that's
		
00:21:00 --> 00:21:03
			capitalist is a spirit of
exploration and initiative and
		
00:21:03 --> 00:21:05
			entrepreneurial innovation.
		
00:21:06 --> 00:21:11
			This is what we see in early
Islamic society, because early
		
00:21:11 --> 00:21:15
			Islamic society had a number of
innovations that were completely
		
00:21:15 --> 00:21:19
			new. Some of those began already
in the lifetime of Muhammad. Some
		
00:21:19 --> 00:21:23
			of those happened later. The first
one that I would like to mention,
		
00:21:23 --> 00:21:24
			I'm just going to mention three.
		
00:21:27 --> 00:21:33
			The first one is the work of the
Islamic charity, Mohammed after it
		
00:21:33 --> 00:21:37
			was Mohammed who created a new
concept of providing public
		
00:21:37 --> 00:21:40
			welfare. The worker is an
institution
		
00:21:41 --> 00:21:45
			generally would be generally
known, the work would be is an
		
00:21:45 --> 00:21:49
			institution that works like that
provides public welfare, and it
		
00:21:49 --> 00:21:56
			has its own endowment. The first
time a work was created was after
		
00:21:56 --> 00:22:01
			the was a few years before
Mohammed passed away. And he set
		
00:22:01 --> 00:22:06
			up the first work in cooperation
with the later Khalif Umar. So
		
00:22:07 --> 00:22:10
			Mohammed and uma were the first
people involved in create setting
		
00:22:10 --> 00:22:15
			up the first one. Setting up a
charity in itself is not an
		
00:22:15 --> 00:22:21
			innovation. charities have existed
since human kind banded together
		
00:22:21 --> 00:22:26
			in societies. But works are
different. Because waqfs are their
		
00:22:26 --> 00:22:30
			own legal entities, which are ring
fenced from interference by
		
00:22:30 --> 00:22:36
			external sources. So a wax was a
seminal financial innovation. That
		
00:22:36 --> 00:22:40
			one occurred while Mohammed was
still alive. The second one
		
00:22:40 --> 00:22:45
			happened long after he had died.
That was monetary reform. One of
		
00:22:45 --> 00:22:48
			the things Hyack says you can tell
how you can tell a capitalist
		
00:22:48 --> 00:22:53
			society is that they have that
they care about stable money and
		
00:22:53 --> 00:22:59
			see and money that has value you
find in Islamic society that
		
00:22:59 --> 00:23:04
			within 60 years, just over 60
years of Muhammad's death, they
		
00:23:04 --> 00:23:08
			created a gold coinage and silver
coinage, the dinars and the DRAM.
		
00:23:08 --> 00:23:12
			These were created under in the
reign of the Khalif Abdul Malik.
		
00:23:13 --> 00:23:18
			When Abdul Malik created a gold
currency in Islam, that was very
		
00:23:18 --> 00:23:21
			innovative because it was the
first time that a gold currency
		
00:23:21 --> 00:23:27
			was created outside Europe. And he
did this indirect in currency
		
00:23:27 --> 00:23:30
			competition with the then
prevailing gold currency of
		
00:23:30 --> 00:23:34
			Byzantium. So monetary reform is
the second innovation of early
		
00:23:34 --> 00:23:35
			Islam.
		
00:23:37 --> 00:23:42
			Then there's a third innovation,
the fonedog fonedog is a term one
		
00:23:42 --> 00:23:45
			encounters if one travels in an
Arabic country because it's used
		
00:23:45 --> 00:23:50
			for hotel or hostel. But in early
Islam Fundex also had another
		
00:23:51 --> 00:23:56
			another purpose Fundex were walled
structures where people from
		
00:23:56 --> 00:24:01
			abroad could bring their goods,
store them and sell them. And
		
00:24:01 --> 00:24:06
			these Fundex were set up and
managed by exterra, taught by
		
00:24:06 --> 00:24:10
			expatriates, principally from
Italian cities such as Venice and
		
00:24:10 --> 00:24:15
			Genoa. So from very early on in
Islamic history, you had
		
00:24:15 --> 00:24:19
			expatriate merchants community who
had their own tax privileges, who
		
00:24:19 --> 00:24:23
			had their own legal protection by
local domestic authorities who
		
00:24:23 --> 00:24:28
			traded and who brought goods into
the Islamic empire and brought
		
00:24:28 --> 00:24:34
			goods from the Islamic empire back
to Europe. And the fonedog very
		
00:24:34 --> 00:24:37
			much functions exactly the way an
offshore Trade Center does. It was
		
00:24:38 --> 00:24:41
			outside it had legal protection by
domestic authorities, but it had
		
00:24:41 --> 00:24:45
			its own and it had its own
privileges, but it created
		
00:24:45 --> 00:24:48
			business and created scope for
entrepreneurial initiative.
		
00:24:50 --> 00:24:53
			So I've given you three exits. So
these have been three examples of
		
00:24:53 --> 00:24:59
			early Islamic innovations work as
a means to provide public welfare
		
00:24:59 --> 00:25:00
			through private
		
00:25:00 --> 00:25:00
			initiative,
		
00:25:01 --> 00:25:06
			monetary reform creation of a gold
currency to create stable money.
		
00:25:08 --> 00:25:12
			And thirdly, offshore trade
centers the phone book, where
		
00:25:12 --> 00:25:16
			which benefited cross
international trade and promoted
		
00:25:16 --> 00:25:17
			international trade.
		
00:25:19 --> 00:25:23
			I now come to capitalism in
Europe, you might ask, well,
		
00:25:23 --> 00:25:27
			capitalism is something that
exists all over the world. How did
		
00:25:27 --> 00:25:30
			it get? How did it get out of
Arabia? How did it get out of the
		
00:25:30 --> 00:25:34
			Islamic empire? Did people just
invent their own capitalism then
		
00:25:34 --> 00:25:34
			later?
		
00:25:36 --> 00:25:41
			My argument is no, they didn't.
All the business people from
		
00:25:41 --> 00:25:45
			Venice and Genoa, who traded in
Boondocks were very alert to what
		
00:25:45 --> 00:25:49
			they saw around them. And when
they came, when they went home,
		
00:25:49 --> 00:25:53
			they said, when we get home, we're
going to try some of this. So the
		
00:25:53 --> 00:25:57
			promotion of Mediterranean
seafaring, by way of convoys,
		
00:25:57 --> 00:26:00
			which sailed out from Venice and
Genoa
		
00:26:01 --> 00:26:06
			copied, how caravan, the financing
structures of caravans, you needed
		
00:26:07 --> 00:26:10
			people to underwrite them, you
needed them to be supplied with
		
00:26:10 --> 00:26:14
			goods by a certain date, they
needed protection, and they needed
		
00:26:14 --> 00:26:17
			to travel in groups. So they did
everything pretty much the way a
		
00:26:17 --> 00:26:21
			caravan did, only they did it
across the sea rather than across
		
00:26:21 --> 00:26:26
			the desert. Now, you might say,
Well, hang on, they probably
		
00:26:26 --> 00:26:30
			figured that out on their own,
didn't they? Well, maybe they did.
		
00:26:31 --> 00:26:36
			But if they did, why did convoys
originate in precisely those
		
00:26:36 --> 00:26:40
			cities who had trade in the
Islamic empire? If the idea
		
00:26:40 --> 00:26:44
			offered itself equally to
everyone, you would have seen
		
00:26:44 --> 00:26:49
			convoys in France or in Spain, or
in England, or in Germany, but you
		
00:26:49 --> 00:26:53
			don't you see them in the very
places where they were Europeans
		
00:26:53 --> 00:26:55
			were interfacing with the Islamic
empire.
		
00:26:56 --> 00:27:00
			There's another aspect of
capitalist society I mentioned
		
00:27:00 --> 00:27:04
			earlier, Hayek said capitalist
societies innovate in many areas.
		
00:27:04 --> 00:27:09
			Another such area is for example,
provision of welfare. And we find
		
00:27:09 --> 00:27:11
			that in England, the Inns of
Court.
		
00:27:13 --> 00:27:19
			And the earliest colleges were set
up as trusts, now, Inns of Court
		
00:27:19 --> 00:27:23
			and trial and colleges, and copy
the notion of the structure of
		
00:27:23 --> 00:27:28
			madrasahs madrasahs were
establishments of higher learning
		
00:27:28 --> 00:27:31
			in Islamic countries, usually
funded by waqfs.
		
00:27:32 --> 00:27:35
			Now the odd thing is that colleges
and Inns of courts were set up by
		
00:27:35 --> 00:27:39
			the by the very people who had
contact with the Islamic empire,
		
00:27:39 --> 00:27:43
			because they had a base in
Jerusalem, the Knights Templar and
		
00:27:43 --> 00:27:44
			the Franciscan friars.
		
00:27:45 --> 00:27:49
			If Trust's were something had been
something that Europeans figured
		
00:27:49 --> 00:27:53
			out for themselves, how come they
happen in the very places, and
		
00:27:53 --> 00:27:56
			through the very people who were
interfacing with their
		
00:27:56 --> 00:28:00
			counterparts in the Islamic
empire? Doesn't seem to me that it
		
00:28:00 --> 00:28:01
			seems an odd coincidence.
		
00:28:02 --> 00:28:06
			And there is the third issue, the
creation of a gold currency in
		
00:28:06 --> 00:28:10
			Western Europe, the first gold
coins were minted in Sicily, in
		
00:28:10 --> 00:28:13
			Genoa, and in Venice, and
Florence.
		
00:28:14 --> 00:28:17
			These are the very cities that
had, again, these are, again, the
		
00:28:17 --> 00:28:21
			very cities that interfaced with
the Islamic empire, if a gold
		
00:28:21 --> 00:28:23
			currency were something that
Europeans had thought of
		
00:28:23 --> 00:28:27
			themselves, why did it happen
there and not someplace else?
		
00:28:28 --> 00:28:34
			So in closing, what I'd say is,
capitalism, which began in Arabia,
		
00:28:35 --> 00:28:39
			then came to Europe, but it
didn't, it wasn't a self starter
		
00:28:39 --> 00:28:43
			in Europe, it was something that
came through emulating examples
		
00:28:43 --> 00:28:44
			set by by Islam.
		
00:28:46 --> 00:28:48
			So in sum, I got three takeaways.
		
00:28:49 --> 00:28:50
			The first is
		
00:28:51 --> 00:28:56
			that capitalism started in Islam.
It's the first instance that you
		
00:28:56 --> 00:28:59
			have a capitalist society, because
it was started by a prophet who
		
00:28:59 --> 00:29:02
			have amongst several other
innovations that prices are in the
		
00:29:02 --> 00:29:03
			hands of God.
		
00:29:04 --> 00:29:07
			The second takeaway is that in a
capitalist society, you see
		
00:29:07 --> 00:29:12
			continuing innovation. And you see
that in early Islamic society, I
		
00:29:12 --> 00:29:16
			gave you a couple of examples, the
walk, monetary reform and the
		
00:29:16 --> 00:29:21
			fonedog. And the third is that
capitalism happened in Europe, in
		
00:29:21 --> 00:29:24
			precisely those places where
Europeans interacted with Muslims.
		
00:29:24 --> 00:29:28
			So there, it's very difficult to
claim that capitalism in Europe
		
00:29:28 --> 00:29:32
			started in any way other than to
exposure to Islam.
		
00:29:33 --> 00:29:34
			Ladies and gentlemen, thank you