MARSUDI

NON MUSLEM PERCEPTION AND ATTITUDE AS A TARGET MARKET OF ISLAMIC BANKING SYSTEM

 

MONEY BANKING AND REAL ECONOMY

 

By : Marsudi

 

 ABSTACT

 

The word of Islamic Bank is very familiar for Moslems society now because most of the countries in the world are already used this model, but how about the Non Moslem society are they accepted the Islamic bank that it based on Quran as holy book of Moslem, or is the Islamic teaching accepted by them because of the universalism of Islamic religion ?.

From above questions this paper  tries to describe and analyze a perception and attitude of Non Moslem society  to syariah bank, studying some  factors which is encouraging Non Moslem society in using or  not using syariah  Bank as an indicator that Indogenously Islamic teaching as a Rahmatan lilalamiin and superior to all religions influencing brightly in non muslems , and  as micro area it will give concrete recommendation to the syariah banking management to be able to  earn more optimal and develop the service activities and the usage of its product which is matching with need of Non Moslem society attitude and perception as a target market , and as a macro area it will  give a good reason to the Government as a public policy maker in relation with the Islamic economic law development for non Moslem country.

 

PROBLEM STATEMENTS

 

The study background of “Perception and attitude of Non Moslem Society  for Islamic (syariah) Banking system” are:

 

The first, for the last few years, Islamic banking system grows continuously quicker than the time estimated. Conventional banks start to race to open Islamic banking system division because they see high enthusiasm society at the Islamic banking system product.

The research which was conducted by Karim Business Consulting ( KBC) from early  2004 passing interview with overall board of directors  in 21 national banks, showing that the client fund potency of loyalist was estimated equal to Rp 10 billions which have used up  especially by Bank Muamalat and Mandiri Syariah  Bank. This Institute divided three client factions which are possibility can sustain society fund gathering for banking industry 1. loyalist 2. market floating  3. conventional loyalist.

Amount of Syariah Banks  also are growing more and more from time to time. In this recent  time there are many syariah banks, which consist of two public banks namely Bank  Muamalat and Syariah Mandiri Bank , and twelve Islamic  Business Unit (UUS), PT Bank of IFI,  Bank Negara Indonesia, Bank Jabar, Bank Rakyat Indonesia, Bank  Danamon, Bank Bukopin, Bank International  Indonesia, and HSBC. BTN, Bank Permata, Bank Niaga and Bank Mega Syariah Indonesia.

Economic observers and practitioner estimated that the map of emulation will become sharp, because of the National Syariah Council (DSN) still promise to give opening permit of syariah bank until become 20 syariah banks established this year. Central Bank of Indonesia noted that the growth of Syariah Bank mean 70 % per year and 88,6 % on 2004. (Progress Report Syariah  Bank Indonesia, 2004). From the market compartment increase 1,1 percentage of totalizing national banking. Concerning with syariah banks amount, until November 2004 there are three syariah public banks and 15 syariah business unit with totally 443 networks.

The second, The Majority of Non Moslem Society is more forward society based on economics activities in comparing with Moslem society, so that the service user of finance is bigger than the monetary value of   Moslem Society and this is the floating market.

The third, The business activity, Syariah Bank Service and product which is conceptually does not base on interest less understood by Moslem Society, and more over especially Non Moslem society which is causing lack of   society enthusiasm to use the service and product of syariah Bank. The data show, during 10 years total market of bank and new Islamic institutions can reach around 1% from national Bank market compartment.

The fourth, The most of all  that  Islamic teachings  as a Rahmatan lil alamiin and superior to all religions, (blessing for all universe and mankind) shows that it must be accepted to the whole of societies whether they are moslems or non moslems.

The fifth, Dr. Rowan Williams as an Archbishop of Canterbury said that the adoption of certain aspects of Sharia law in the UK “seems unavoidable” he argues that adopting parts of Islamic Sharia law would help maintain social cohesion. Although he said above but the specific reason is not understandable because he continued with the statement “my aim is only, as I have said, to tease out some of the broader issues around the rights of religious groups within a secular state”.

The sixth, on the contrary, dr. Ruyandi Hutasoit the Chairman of Christian party Indonesia (PDS) refused execution of Islamic banking constitution draft in Indonesia if it become a constitution, according to Retna PDS disagree because in a sentence of academic copy mentioned “Islamic Monetary concept relied on principle of morality, justice and that is according to its operational base in the form of Islamic law which is coming and formalizing  from  Holy Quran and, Hadist,  also Ijma and Qiyas”.

 

THEORITICAL BACK GROUND

 

1. Non Muslem

 

Etymologically the word of non according to Merriam-webster.com-dictionary is  Middle English, from Anglo-French, from Latin non not, from Old Latin noenum, from ne- not + oinom, neuter of oinos one — more at no, one, and muslem is Arabic , literally, one who submits (to God) and an adherent of Islam, so non muslem is some one who is not as an adherent of Islam.

 

2. Perception.

Wikipedia, in psychology and the cognitive sciences, perception is the process of attaining awareness or understanding of sensory information. It is a task far more complex than was imagined in the 1950s and 1960s, when it was proclaimed that building perceiving machines would take about a decade, but, needless to say, that is still very far from reality. The word perception comes from the Latin perception, percepio, , meaning “receiving, collecting, action of taking possession, apprehension with the mind or senses.”^[1]

There are two basic theories of perception: Passive Perception (PP) and Active Perception (PA). The passive perception (conceived by René Descartes) is addressed in this article and could be surmised as the following sequence of events: surrounding → input (senses) → processing (brain) → output (re-action). Although still supported by mainstream philosophers, psychologists and neurologists, this theory is nowadays losing momentum. The theory of active perception has emerged from extensive research of sensory illusions, most notably the works of Professor Emeritus Richard L. Gregory. This theory is increasingly gaining experimental support and could be surmised as dynamic relationship between “description” (in the brain) ↔ senses ↔ surrounding.

Perception is one of the oldest fields in psychology. The oldest quantitative law in psychology is the Weber-Fechner law, which quantifies the relationship between the intensity of physical stimuli and their perceptual effects. It was the study of perception that gave rise to the Gestalt school of psychology, with its emphasis on holistic approach.

Perception is defined as “ The assigning of immediate meaning to sensory data by the central nervous system. After perception has been become a cognition” ( Minick 1968) on Victoria O’donnell and June Kable ( 1982 ).

Perception, then is the process of extracting information from the world outside us as well as from within ourselves. Henry Miller described perception in this way: “ The only difference in life is your point of view, how you look at the world . The world does not change, you change. And how do you change? by your different attitude. Whether you see it from down here, like the frog,….or up above, like the eagle. Or still higher, like the gods” ( Gordon 1971).

Each individual process his/her own private perceptual field that is unique to him/her. This perceptual field is formed by the influences of values, roles, group norms, and self-image. These factors color the ways in which a person perceives the event around him/her.

The persuader then practices effective communication by being aware that is “ the process by which a speaker manipulates symbols within his perceptual world and, through a complex process of message exchange with a listener, alters the listener’s perceptual world in ways the speaker desires” ( Hart, Friedrich, and Books ).

So it is, then, that a persuadee must perceive a persuader’s efforts before attention can be gained and maintained. If the persuasive effect does not survive the persuadee’s perceptual field, then all other efforts are futile.

Perception is strongly influenced by an individual’s needed s and wants. We hear what we want to hear, see what we want to see, and this is referred to as selective perception. Perception is also influenced by one’s physical state. There are time when a person is ill or weary, and perception operate at minimum capacity. Excess worry also influences what we perceive and how we perceive it.

3. Attitude

ATTITUDE is a hypothetical construct that represents an individual’s like or dislike for an item. Attitudes are positive, negative or neutral views of an “attitude object”: i.e. a person, behaviour or event. People can also be “ambivalent” towards a target, meaning that they simultaneously possess a positive and a negative bias towards the attitude in question.

Attitudes are composed from various forms of judgments. Attitudes develop on the ABC model (affect, behavioral change and cognition). The affective response is a physiological response that expresses an individual’s preference for an entity. The behavioral intention is a verbal indication of the intention of an individual. The cognitive response is a cognitive evaluation of the entity to form an attitude. Most attitudes in individuals are a result of observational learning from their environment( Wikipedia, Attitude ).

Theory of attitude and attitude change attempt to define the concept of attitude, to explain how attitude operate within a person’s psychological make-up, and to predict how attitude can be changed. People frequently give indication of attitude without consciously knowing that they are making attitude statement. For example, if you were asked,” What is your attitude toward spinach?” you might respond,” I don’t like it” on the other hand, if you were asked, “ What is your attitude toward ice cream?” you might respond.” I like it”.

In each case, you have expressed an attitude, which is a statement of positive or negative preference. Attitude is a statement of readiness to respond to an idea, an object, or a course of action.  An attitude may thus be defined as a learned and relatively enduring predisposition to respond favourably or unfavourably to an idea, object, or behaviour. It is expressed as a specific evaluative statement “ I agree” or “ I feel strongly about that”.

Beliefs were defined in the previous chapter as inference that people make about the word, cognitions about the existence of things, events, ideas, and person, and the perceived probability of relationship between them and characteristics of them. Attitudes are products of beliefs that cluster together to form preferences for or against an object or an idea. Attitudes are, therefore, derived from our views about  the world.

Beliefs and attitudes are formed form direct observation or information received from external sources. Martin Fishbein and Icek ajzen refer to this as the information processing approach, which “views man as an essentially rational organism, who uses the information at this disposal to make judgments, form evaluations, and arrive at decision” (1975,p. 14).

For example, if a student has gathered favourable information about school and has developed salient beliefs such as “School is fun,” “school is a good place to make friends,” or “the information learned in school is important,” his/her attitude might be “I like school. “the information processing stage produced enough “facts” to justify salient beliefs and attitudes about education.

One might infer that the attitude “I like school” reveal that the person will pursue an education. Such a conclusion regarding the person’s behaviour, however, cannot be drawn because attitude are not necessarily prediction of behaviour. Attitude can only be used to give others indications of how people feel about a given behaviour.

Fishbein and Ajzen’s model (1975, p.15) further explains the relationships between beliefs, attitudes, and intentions with respect to the object and behaviour (figure 3.1). we have added example about school to make the model clearer.        

4. Target market

Once the firm has identified its market-segment opportunities, it has to decide how many and which one to target. ( Philip Kotler, Swee Hon Ang , Siew Meng Leong and Chin Tiong Tan, 2003 ) in evaluating different market segments, the firm must look at two factors: The segment’s overall attractiveness and the company’s objective and resources. Does a potential has segment have characteristic that make it generally attractive, such as size, growth, profitability, scale economies, and low risk? Does investing in the segment make sense given the firm’s  objectives, competencies, and resourcies?. Some attractive segment may not mesh with the company’s long-run objective, or the company may lack one or more necessary competencies to offer superior value.

Having evaluated different segment the company can consider five patterns of target market selection:

1.      Single-segment concentration, through concentrated marketing, the firm gains a strong knowledge of segment’s needs and achieves a strong market presence. Further, the firm enjoys operating economies through specializing its production, distribution, and promotion, if it captures segment leadership, the firm can earn a high return on its investment.

2.      Selective specialization, the firm selects a number of segments, its objectively attractive and appropriate. There may be little and no synergy among the segment, but it promises to be a money maker. This multi segment strategy has the advantage of diversifying the firm’s risk.

3.      Product specialization, the firm make a certain product that it sells to several segment and builds a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology.

4.      Market specialization, the firm concentrate on serving many needs of a particular customer group. An example would be a firm that sells assortment of products only to university laboratories. The firm gains the strong reputation in serving this customer group and becomes a channel for additional product the customer group can use. The downside risk is that the customer group may suffer budget cuts.

5.      Full market coverage, the firm attempts to serve all customer groups with all the product they might need. Only very large firms such a Sony ( television market), Toyota ( vehicle market), and Coca-cola ( drink market) can undertake a full market coverage strategy. Large firm can cover a whole market in two broad ways: 1. through undifferentiated marketing or differentiated marketing. In  undifferentiated marketing, the firm ignores segment differences and goes after the whole market with one offer. It designs a product and marketing program that will appeal to the broadest number of buyers. It relies on mass distribution and mass advertising. It aims to endow the product with superior image in people’s mind. Undifferentiated marketing is “ the marketing counterpart to standardization and mass production in manufacturing “. The narrow product line keeps down cost of research and development, production, inventory, transportation, marketing research, advertising, and product management. Presumably, the company can turn its lower costs into lower prices to win the price-sensitive segment of the market. In differentiated marketing, the firm operates in several market segment and designs different products for it segment. General motors does this when it says that it produces a car for every “ purse, purpose, and personality.” IBM offers many hardware and software package for different segment in the computer market.

Additional Consideration on target market

Four other considerations must be taken into account in evaluating and selecting segments: 1. Ethical choice of market target 2. Segment interrelationships and super segment 3. Segment-by-segment invasion plans 4. And inter segment cooperation.

1.      Ethical Choice of market target, market targeting some times generates public controversy. The concern arises when marketers take unfair advantage of vulnerable groups ( such as children ) or disadvantage groups ( such as poor people ), or promote potentially harmful product. The fast-food industry has been heavily criticized for marketing efforts directed toward children. Critics worry that high-powered appeals presented through the mouths of lovable animated characters will overwhelm children’s defenses and lead them to eat too much sugared cereal or poorly balanced breakfasts. Toy marketers and drug manufactures have been similarly criticized. The issue is not who is targeted, but rather, how and for what. Indeed not all attempts to target children, minorities, or other special segment draw criticism. Colgate Palmolive’s Colgate Junior toothpaste has special features designed to get children to brush and more often. Socially marketing calls for targeting that serves not only the company’s interests but also the interests of those targeted.

2.      Segment interrelationships and Super segments, in selecting more than one segment to serve, the company should pay close attention to segment interrelationships on the cost, performance, and technology side. A company carrying a fixed cost ( sales force, store outlets) can add product to absorb and share some costs. The sales force will sell additional products, and fast-food outlet will offer additional menu items. Economies of scope can be just as importance as economies as scale. Companies should try to operate in super segments rather than in isolated segments. A super segment is a set of segment sharing some exploitable similarity. For example, many symphony orchestras target people with broad cultural interest, rather than only those who regularly attend concerts.

3.      Segment-by-segment invasion plans, a company would be wise to enter one segment at a time without revealing its total expansion plans. Competitors must not know to what segment the firm will move next.

4.      Inter segment Cooperation, the best way to mange segments is to appoint segment managers with sufficient authority and responsibility for building their segment’s business. At the same time, segment managers should not be so focused as to reist cooperating with other groups in the company.

 

5.Islamic point of view.

Al-Quran

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And We have sent you ( O Muhammad PBUH ) not but a mercy for ‘Alamiin ( mankind, Jinn and all that exists).

uqèd ü”Ï%©!$# Ÿ@y™ö‘r& ¼ã&s!qߙu‘ 3“y‰ßgø9$$Î/ Èûïϊur Èd,ysø9$# ¼çntÎgôàã‹Ï9 ’n?tã ÈûïÏd‰9$# ¾Ï&Íj#ä. 4 4’s“x.ur «!$$Î/ #Y‰‹Îgx© ÇËÑÈ

He it is Who has sent his messenger ( Muhammad PBUH ) with guidance and the religion of truth ( Islam ). That he may make it ( Islam ) superior to all religions. And all-Sufficient is Allah as a Witness.

3 ¨@ymr&ur ª!$# yìø‹t7ø9$# tP§ymur (#4qt/Ìh9$#

…..” Whereas Allah has permitted trading and forbidden Riba ( usury )”…

 

Al Hadist

Refer to the case of Non Muslem Perception for Islamic banking system Rasulullah Muhammad (PBUH) ever did a business with non muslem, Base on  hadits shahih of Rasulullah ( PBUH ), he had bought from pagan infidel people as well as buying from Jew people. All these is a form of mu’amalah ( transaction). When Rasulullah (PBUH ) passed away, he still mortgage its armour to a Jew for eating his family

 (Wahid, on Rohmat, 2006) Following the concept of religion as an open text, considering the Koran as the most authoritative Islamic teaching resources teaches man through symbols which are open to multi-faced interpretations. Classical Islamic law, as a result of interpretation of the Koran and Hadits by clerics were formed and limited by certain situations and conditions which were not free form historical and political context. That is why we should analyze these Islamic laws to revitalize them into the modern era. This is hard work, for so doing there is a requirement for us to find the ‘essence’ of the message of the Islamic laws. The difficulty lies on the object of investigation, that is Islamic law is actually the discourse of a subject. To analyze discourse is to investigate an object which is produced by a subject and received by other subjects.

 

Elaborates the intermingle between public and private affairs is a kind of dialectical relationship between the private affairs of the pillars of Belief (Rukun Iman) and the public affairs of the pillars of Community (Rukun Islam) and both should formulate this intermingle area and Wahid introduces it as Theology of Social (Rukun Sosial, the Social Pillars). Furthermore, Islam as the religion of law and the source of norms and values pretend to rule all aspects of living and it is just possible for Islam to develop a cultural approach which wants to implement Islamic law substantially.

 

Islamic civilization respects human dignity as the ultimate goal of Islamic law (maqashidusy syari’ah) which is manifest in the principle of Islamic law known as the protection of five basic human needs (daruriyyat), namely (1) the protection of self (hifz al-nafs) from any violence; (2) the protection of religion (hifz al-din) from any enforced conversion; (3) the protection of family and the next generation (hifz al-nasl); (4) the protection of personal property (hifz al-mal); and (5) the protection of profession or intellect (hiz al-‘aql).

 

Following the cosmopolitan character of Islamic civilization, Wahid develops two approaches for reinterpreting Islam which is compatible with the contemporary demands that are pribumisasi and modernization.

 

First is by ( Indonesian case ) following Walisanga tradition to expound his Pribumisasi (domestication) approach as a response to the problem facing by Muslims throughout their history that is how to incorporate the local culture (‘adah) into norm (syari’ah), the same problem should be solved by ushul al-fiqh. It is not another term for syncretism because it does not an effort to harmonize the previous beliefs in supernatural power and its eschatological dimension with Islamic beliefs.14) He wants to remind us of adaptive legalism— ‘legalism that, while maintaining Islamic principles, also implied a gradual framework for change through religious laws.

 

Pribumisasi is to understand Islam which put the local culture into its consideration for reformulating religious law without changing the principles of law itself. It does not pretend to replace religion with culture due to it is concerned with the manifestation of the Muslim’s religious life, not to replace the fundamental beliefs of Islam and its formal rituals. It is an effort to implement Islamic universal values by means of incorporating them to the system of local culture or Indonesian cultural system. By doing so, the manifestation of Islam in Indonesia is different from that in Middle East because of its different cultural system. As a result, Islamic laws (syari’ah) in Indonesia are slightly different from that in Middle East. This approach does not want to replace religion in opposition with the culture.17).

 

I call this approach ‘historical Islam’, which tries to consider thoroughly the influences of certain historical context in the implementation of Islamic law. This approach built on the assumption that it is impossible to introduce Islam within the community without understanding its culture well. For example, Islam was successful on converting Indonesians on a massive scale just after Islam was able to accommodate, corporate, and surpass the Indonesian culture and it took centuries to understand the culture. At first Islam was not introduced into Indonesian society in a doctrinal approach, considering it will contradict to fundamental beliefs of the Indonesians. Of course they modified the Islamic doctrine to fit the situation, condition, and history of the Indonesian people. The best approach was to solve the actual problems of Indonesian society at that time which I call the ‘civilization strategy approach’.

 

The historical Islam approach will help Islamic activists to clarify the target of their mission and formulate the method and strategy of the mission. It will hinder the birth of radical Islamists who believe in the universal mission of Islam and consequently they do not agree with the Islamic historical approach which accommodates local culture. In the global context, they are in opposition with the process of modernization which is accused of being part of a Christian plot on the Islam community. They do not want to accommodate both local culture and global culture. It is not surprising, for their top-down approach into religion means that they just understand the religion as written scripturally in the Koran. Moreover, they believe that there is only one manifestation of Islam, so they often accused those who have different opinions of apostasy.

 

The second is to follow the modernization approach, namely reinterpreting Islam so as to be compatible with values of modern civilization, such as, the concept of democracy and economy. However, Wahid is critical of modern civilization and tries to guide the courses of modernization in the framework of religious thought. One of his efforts is to formulate a theology of Islamic democracy. This theology of democracy is based on Islamic teachings which highly value the life of human beings which in the Enlightenment era was called humanism and then gave birth to liberalism, but he is critical of the Enlightenment era for adopting both humanism and liberalism as an ideology. As humanist Wahid respects the status and value of human beings, so that he does not tolerate any violence, especially human death in the name of ideology or revolution. Frans Magnis Suseno correctly says that Wahid is not an ideologist but a pragmatist because he will do something useful by all means without a need for binding to any abstract principles except on petty moralistic attitudes.That is why Wahid often misunderstood by his opponent and his ‘shifting pronouncements, alliances and public stands have led to a joke that there are three things you can never be certain about: life, death and Gus Dur.’ The above two approaches are necessary for religion to make an effort in developing a framework for implementing fundamental Islamic values.

 

The above two approaches are necessary for religion to make an effort in developing a framework for implementing fundamental Islamic values. Legalistic Islamic laws should be innovated by applying these approaches, but also should be reconciled with fundamental Islamic values. Wahid evaluates the limit of classical Islamic laws (fiqh) as a result of efforts of ijtihad by classical clerics to be implemented into the modern era. Accordingly, he suggests that Muslims revitalize the Islamic teachings by adopting modern values and institutions and by adjusting to a given culture where Islamic laws want to be implemented. In so doing, he only feels attached to the most fundamental Islamic values in order to make possible a deconstruction process of religious teachings. As long as the most fundamental Islamic value is the concept of the Oneness of the God (tawhid) that the God is the center of all things namely everything starts and returns to the God alone.

 

(Hefner on Asia Policy 2008)  The acceptance of conventional banking on the grounds of public welfare remains the guiding principle of policy in the great majority of Muslim countries today. The two broad exceptions to this generalization are: first, countries such as Pakistan, Iran, and Sudan that have used the power of the state to do away with conventional finance entirely; and, second, countries  such as Libya, Morocco, and Syria that proscribe IF. With the notable exception of these examples at the margins, most governments in Muslim-majority countries have over the past two decades moved toward a pragmatic financial pluralism characterized by the coexistence of financial institutions based on both Islamic and conventional finance.

(Frank E. Vogel on Asia Policy 2008) : The Muslim public has always played a central role in the Islamic legal system. The public’s problems, customs, support, and willingness to accept offered solutions has always had a formative role in fiqh’s (Islamic jurisprudence) content. The public determined ultimately who among scholars had the most influence and prestige. Here questions arise as to whether the elites in IF—investors, practitioners, legal scholars, theoreticians, and regulators—each group with its own perspective, will trust the Muslim public to decide the future of IF and will empower them through increasing education and transparency. But the elites worry: will the popular “market,” both commercial and religious, sufficiently protect Islamic legitimacy and prevent abuses, as understood by these elites?

(Zeti, on Asia Policy 2008)  : With an estimated average annual growth of 15% to 20% IF is now among the fastest growing financial segments in the international financial system. As recently as five years ago IF was regarded as an infant industry striving to prove its viability and competitiveness. In these five years IF has recorded dramatic growth, having a presence now in more than 75 countries both in Muslim and non-Muslim dominated communities. A growing number of international financial centers—such as London, Singapore, and Hong Kong—are beginning to offer Islamic financial products and services. The number of Islamic banking institutions worldwide, including conventional banks that are offering Islamic banking services, has doubled to more than 300. The total value of Islamic financial assets under their management is now estimated to exceed $1 trillion, about fivefold the magnitude of five years ago.

(Vogel on Asia Policy 2008)  : The experience of IF indicates that the application of sharia need not lead to extremism, rejection of Western values, or the empowerment of reactionary social groups. Initiatives under an Islamic banner can usher in improvements in Muslims’ lives without engendering social, political, and international strife.

(Venardos on Asia Policy 2008): There is a viable niche market for IF products in the United States. Human resources and training in IF and sharia expertise are slowly developing. Unfavorable perceptions and a lack of understanding toward Islam in general and IF in particular may, however, impede the development of IF in the United States. Changing such perceptions will take time.

 

The U.K. experience

 

(Chamber Global 2006) In the U.K., with its 1.8 million Muslims, financial regulators have long recognized the growing demand for Shariacompliant financial services. In 1999, Howard Davies, former Chairman of the Financial Services Authority (FSA), hosted a meeting with representatives of the British Muslim community and detailed the regulator’s likely approach to regulating Islamic banking in the U.K. In August 2004, the FSA authorized the first Sharia-compliant retail bank in the U.K., the Islamic Bank of Britain (IBB). In March 2006, the FSA authorized the European Islamic Investment Bank, a Sharia-compliant wholesale Islamic bank, and in October, 2006, the FSA took steps to require disclosure on Sharia-compliant mortgages and other Islamic products. In order to be considered truly Sharia-complaint, Islamic financial services and products must be both free from interest and managed in a manner that is consistent with Sharia law. This means that the managing financial institution (FI) cannot make any investments that earn interest or are otherwise prohibited in any way. Most Islamic FIs accomplish this by maintaining an internal Sharia Supervisory Committee. The IBB, for example, describes the role of its committee as follows: The Sharia’a Supervisory Committee is comprised of experts in the interpretation of Islamic law and its application within modern day financial institutions. They are world leading scholars representing a wide spectrum of the Islamic faith and they ensure that Sharia’a compliance is at the heart of everything we do and every product and service that we offer.

 

The Committee meets on a regular basis to review all contracts and agreements relating to our transactions as well as to advise us, guide us and sanction any new services that we introduce. The Committee certifies every account and service we provide - without their approval, we cannot introduce a new product or service. Both the existence of such a committee and the disclosure of its members are required under the FSA regulatory regime. While the management board of the FI is not appointed by the committee and is under no formal obligation to follow the directives of the committee, in practice, instances where management fails to follow the committee’s guidance are rare.

 

One of the most important issues faced by the FSA in its regulation of financial services suitable for the Muslim population was the treatment of deposits. The FSA describes the issue and solution this way: The U.K. legal definition of a deposit is: “a sum of money paid on terms under which it will be repaid either on demand or in circumstances agreed by the parties.” In other words, money placed on deposit must be capital certain. For a simple non-interest-bearing account there is no problem. The bank safeguards the customer’s money and returns it when the terms of the account require it to do so. However with a savings account there is a potential conflict between U.K. law, which requires capital certainty, and Sharia law, which requires the customer to accept the risk of a loss in order to have the possibility of a return.

 

Islamic banks resolve this problem by offering full repayment of the investment but informing the customer how much should be repayable to comply with the risk-sharing formulation. This allows customers to choose not to accept full repayment if their religious convictions dictate otherwise.

 

This sort of creative thinking is illustrated repeatedly in other types of Sharia-compliant financial services. While the words and phrases used to describe the various Islamic products and principles may, upon initial consideration, seem somewhat unusual to the secular financial services industry, the relationships they describe are not altogether unfamiliar.

 

Canadian prospects

 

(Chamber Global 2006)The number of Muslim Canadians doubled from 253,300 in 1991 to 579,600 in 2001, the largest population increase among religious groups in Canada during that ten-year period. As of 2001, Muslims comprised 2% of Canada’s total population,12 and while the 2006 Census does not provide more recent information regarding religion and ethnicity, current trends suggest that this number continues to rise. In light of such population growth,and the rise of Islamic financial services worldwide, no doubt the demand for Islamic banking and Takaful

insurance will also increase in Canada.

 

Based on the success of the introduction of Islamic financial services to other economies, it would appear likely that a similar financial service industry will in time also develop in Canada. Furthermore, Islamic products may be attractive to individuals of other non-Islamic traditions who are interested in making “ethical” investments. Finally, as noted above, many Sharia-compliant products are analogous to common secular financial products and the principles upon which Sharia-compliant FIs operate are somewhat akin to those upon which Canadian credit unions and mutual insurance companies operate. OSFI has already indicated that it is considering certain regulatory issues related to Islamic financial services in Canada. Some of these issues presumably include: corporate governance; capital adequacy; the various prohibitions in the Bank Act (Canada), including the leasing prohibitions; comfort of the Canadian regulator with both the concepts that underlie Sharia-compliant products

and also the home jurisdictions of some foreign companies that may wish to enter the Canadian market. The FSA experience would presumably provide a framework for considering how best to address those issues in the Canadian context. Ideally, OSFI, as is its custom, would engage in a broad consultative process in order to elicit the views of all relevant stakeholders, including the rapidly growing Islamic community in Canada.

 

Mawdudi, a prominent Pakistani Muslim scholar, summarizes the basic differences between Islamic and secular states as follows:

1)

An Islamic state is ideological. People who reside in it are divided into Muslims, who believe in its ideology and non-Muslims who do not believe.

2)

Responsibility for policy and administration of such a state “should rest primarily with those who believe in the Islamic ideology.” Non-Muslims, therefore, cannot be asked to undertake or be entrusted with the responsibility of policymaking.

3)

An Islamic state is bound to distinguish (i.e. discriminates) between Muslims and non-Muslims. However the Islamic law “Shari`a” guarantees to non-Muslims “certain specifically stated rights beyond which they are not permitted to meddle in the affairs of the state because they do not subscribe to its ideology.” Once they embrace the Islamic faith, they “become equal participants in all matters concerning the state and the government.”

Sheikh Najih Ibrahim Ibn Abdullah remarks that legists classify non-Muslims or infidels into two categories: Dar-ul-Harb or the household of War, which refers to non-Muslims who are not bound by a peace treaty, or covenant, and whose blood and property are not protected by the law of vendetta or retaliation; and Dar-us-Salam or the household of Peace, which refers to those who fall into three classifications:

1)

Zimmis (those in custody) are non-Muslim subjects who live in Muslim countries and agree to pay the Jizya (tribute) in exchange for protection and safety, and to be subject to Islamic law. These enjoy a permanent covenant.

2)

People of the Hudna (truce) are those who sign a peace treaty with Muslims after being defeated in war. They agree to reside in their own land, yet to be subject to the legal jurisprudence of Islam like Zimmis, provided they do not wage war against Muslims.

3)

Musta’min (protected one) are persons who come to an Islamic country as messengers, merchants, visitors, or student wanting to learn about Islam. A Musta’min should not wage war against Muslims and he is not obliged to pay Jizya, but he would be urged to embrace Islam. If a Musta’min does not accept Islam, he is allowed to return safely to his own country. Muslims are forbidden to hurt him in any way. When he is back in his own homeland, he is treated as one who belongs to the Household of War.

 

 

   

METHODOLOGY

 

The Methodology of this study ( Choudhury, Explaining the Quran a Socio-Scientific Inquiry,2003 ) is concerned with discovering the methodology shown in the tawhidi knowledge-centered worldview of the Quran in a way that can be explicated to form of uniq epistemological foundation of the Quranic praxis for explaining all socio-scientific phenomena.

It will be seen that the Tauhidi knowledge-centered worldview that emerges as a substantive methodology, will be of a nature contrary to the epistemology of all received bodies of thought in the natural and social sciences. The quranic methodology so derived will be shown to apply uniquely in logical way to both the natural and social sciences. Thus terminology of the tauhidi knowledge-centered foundations of the socio-scintific order is issued.

While establishing the Quranic knowledge-centered worldview by principally referring to the Quran with due to the hadist and Sunnah and claiming its uncompromising distinction from a rationalistic philosophies of the sciences and human behaviour, extensive study of received philosophies of the sciences  is undertaken. Within this critical approach real problems of human thought and experience are addressed. Some this issues and problems are of a mundace nature, such as the nature of markets, ecology, institution, educational planning and delineation of the quranic world system for the social and political economic orders of Islam.

In all investigations and research the epistemology of the Tauhidi worldview, that is the unified knowledge centered methodology, will be shown to arise in a natural way as a general system approach to studying the universe as presented in the Quran. It will be seen that such a model emanates in reference to extensive fields of diversely relational forms that pervasively interact, complement and evolve as processes from each other under the principle of interaction, integration and creative evolution ( IIE ) (Khalqun Jadiidun).

Client motivation is influenced by many factor, which in general can be categorized becoming: ( 1) demography variable, ( 2) economic variable, and ( 3) social variable. Demography variable consist of: education level, age, and gender. Economic variable is level of family income, expenditure of family, work, and accesabelity ( transportation and communications). Whereas social variable is consisting of : cosmopolitan, class of social, religion, and openness to idea.

 

On religion factor writer just only want to analyze the teaching of Non Moslem Religion from their religion scholars base on their holy book. Relation with opinion  respond of responder about Islamic Bank and factors influencing, it can be seen at picture  below :

 

 

In Conclusion here below the process of derivation of the unity of knowledge in Quranic world system:

Ω (Q,S)  → {θ} → X﴾θ) → W﴾ θ ¸X﴾ θ) )            → θ_N ……. →  Ω

01.The Knowledge centered  Quranic worldview

02.Tawhid as unity of divine knowledge

 

 

 

 

 

 

 

 

03.Prophetic guidance: Sunnat al-Rasul

 

                                                                    

08.Culmination of the knowledge unification and evaluation to the Hereafter (Akhira): Akhira as the event of complete knowledge and equivalent to the primal order of tawhid

i     i n    n t     t e     e r     g a     r c     a t     t e     e

06.Creative Evaluation Khalq in-Jadid

05.Emanation of knowledge-induced world system: Ayath Allah

04.Knowledge-flows from Tawhid: unificationnof knowledge as process

07.Repetition of the same process: unification of knowledge by instruments, guidance and natural Evolution in perpetuity

 

 

 

09.Process-oriented methodology of the unity of knowledge as the singular Qur’anic methodology for all world-system

 

 

 

 

 

 

Principle of pervasive complementarities

Complexity with systematic order

Unity in diversity

 

 

Source:  Explaining the Quran-A socioscientific inquiry, Masudul A.Choudhury, 2002

 

 

 

 

keep on the right process that accordance to Quran and Sunnah. This is explained by verse 53 that Verily all matters at the end go to Allah.

 

RESULT DISCUSSION

 

1. Islamic teaching as a Rahmatan lilalamiin and superior to all religions.
2. Islamic teaching allow doing business with non muslem.
3. An Islamic state is bound to distinguish (i.e. discriminates) between Muslims and non-Muslims. However the Islamic law “Shari`a” guarantees to non-Muslims “certain specifically stated rights beyond which they are not permitted to meddle in the affairs of the state because they do not subscribe to its ideology.” Once they embrace the Islamic faith, they “become equal participants in all matters concerning the state and the government.”

4.      Perception is strongly influenced by an individual’s needed s and wants. We hear what we want to hear, see what we want to see, and this is referred to as selective perception. Perception is also influenced by one’s physical state. There are time when a person is ill or weary, and perception operate at minimum capacity. Excess worry also influences what we perceive and how we perceive it.

5.      Attitudes are composed from various forms of judgments. Attitudes develop on the ABC model (affect, behavioral change and cognition). The affective response is a physiological response that expresses an individual’s preference for an entity. The behavioral intention is a verbal indication of the intention of an individual. The cognitive response is a cognitive evaluation of the entity to form an attitude. Most attitudes in individuals are a result of observational learning from their environment.

6.      Once the firm has identified its market-segment opportunities, it has to decide how many and which one to target, here non Moslem are the target market.

7.      Pribumisasi is to understand Islam which put the local culture into its consideration for reformulating religious law without changing the principles of law itself. It does not pretend to replace religion with culture due to it is concerned with the manifestation of the Muslim’s religious life, not to replace the fundamental beliefs of Islam and its formal rituals. It is an effort to implement Islamic universal values by means of incorporating them to the system of local culture or each countries cultural system.

8.      Follow the modernization approach, namely reinterpreting Islam so as to be compatible with values of modern civilization, such as, the concept of democracy and economy.

9.      The public’s problems, customs, support, and willingness to accept offered solutions has always had a formative role in fiqh’s (Islamic jurisprudence) content.

10.  Initiatives under an Islamic banner can usher in improvements in Muslims’ lives without engendering social, political, and international strife.

11.  In these five years IF has recorded dramatic growth, having a presence now in more than 75 countries both in Muslim and non-Muslim dominated communities. A growing number of international financial centers—such as London, Singapore, and Hong Kong—are beginning to offer Islamic financial products and services.

1. The experience of IF indicates that the application of sharia need not lead to extremism, rejection of Western values, or the empowerment of reactionary social groups.

13.  Unfavorable perceptions and a lack of understanding toward Islam in general and IF in particular may, however, impede the development of IF in the United States. Changing such perceptions will take time.

 

1. However with a savings account there is a potential conflict between U.K. law, which requires capital certainty, and Sharia law, which requires the customer to accept the risk of a loss in order to have the possibility of a return.

 

1. The Canadian regulator with both the concepts that underlie Sharia-compliant products and also the home jurisdictions of some foreign companies that may wish to enter the Canadian market. The FSA experience would presumably provide a framework for considering how best to address those issues in the Canadian context. Ideally, OSFI, as is its custom, would engage in a broad consultative process in order to elicit the views of all relevant stakeholders, including the rapidly growing Islamic community in Canada.

 

CONCLUTION

From above reasons this paper  tries to describe and analyze a perception and attitude of Non Moslem society  to syariah bank, studying some  factors which is encouraging Non Moslem society in using or  not using syariah  Bank as an indicator that Indogenously Islamic teaching as a Rahmatan lilalamiin and superior to all religions influencing brightly in non muslems , and  as micro area it will give concrete recommendation to the syariah banking management to be able to  earn more optimal and develop the service activities and the usage of its product which is matching with need of Non Moslem society attitude and perception as a target market , and as a macro area it will  give a good reason to the Government as a public policy maker in relation with the Islamic economic law development for non Moslem country as follow :

1. Islamic teaching as a Rahmatan lilalamiin and superior to all religions allows doing business with non muslem.
2. The experience of IF indicates that the application of sharia need not lead to extremism, rejection of Western values, or the empowerment of reactionary social groups.
3. Unfavorable perceptions and a lack of understanding toward Islam in general and IF in particular may, however, impede the development of IF in the (Ex .United States). Changing such perceptions will take time
4. Non Moslem perception is strongly influenced by an individual’s needed s and wants. We hear what we want to hear, see what we want to see, and this is referred to as selective perception, so we should make them understanding better on Islam as rahmatan lilalamiin and make the Islamic Financial product are accepted by them on services and others.

5.      Most attitudes in individuals are a result of observational learning from their environment. So the environment of Islamic banking and finance must be suitable with their environment of their business as far as it is not contrary with Islamic law.

6.      Doing Pribumisasi (to understand Islam which put the local culture into its consideration for reformulating religious law without changing the principles of law itself) is one of ways to open Islamic business in non Moslem country, so most of non Moslem people will feel enjoy to become Islamic bank or finance client.

 

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www. Bank muamalat.com

CHAPTER THREE

 

UNITY OF KNOWLEDGE

AS THE WORLDVIEW

Prof.Dr.Masudul Alam Choudhury.Msc.

 

A new paradigm − as a revolutionary breakthrough with its permanent attributes of universality and uniqueness − has surpassing impact. It is the foundation of great minds and revolutionary feats in the socio-scientific world-system. By it the mind expands its vision step by step until suddenly, with abrupt illumination, it realizes its victory. Nations are moved by its newly discovered yet primordially existing truth. The awakening is as if a life-fire has come out of the heavens.  

 

Revolutionary paradigm as worldview

 

The ways toward liberation and coming into harmony with the worldview, now defined as the most universal and absolutely irreducible paradigm of all paradigms, are two. Firstly, it is to uphold deeply the indispensable validity of the Oneness of God in the universal scene. This will embrace both the individual conscience and the subtle order of all the sciences. It takes place in a re-emanation of private and public activity on the scholarly, political and community fronts.

The second way is as Kuhn has explained − how scientific revolution is established. In practice, this way is to carry on vigorous activities revolving around the worldview by committed members, students, scholarly groups and the scientific forums that together ventilate the worldview.

The liberating effects of the worldview will then exist on three levels. Firstly, the epistemological level is primal. This will induce renewed awareness and consciousness in the beholder. The consciousness is that of beholding, understanding and applying the foundation of unity of divine knowledge to all world-system issues. Thus the meaning of the divine functioning in such foundational knowledge is essential. This is to accept the divine roots of knowledge as the primal foundation of all knowledge, hence of all configurations of world-systems. Without this, in connection with the phases of knowledge development that follows, recourse to divine knowledge for worldly reconstructions is not possible, or it remains a speculative enterprise. Divine knowledge must therefore be meaningful in its benefits for the broadest comprehension of reality and in developing verifications and inferences from it for the sustenance of life, existence, experience and beyond.

Secondly, the ontology relating to the epistemological phase, as the being and becoming of logical formalism of the epistemological ideas, must be articulated through significant scientific and public discourse. We define ontology in this book in an engineering sense, rather than in the metaphysical sense.

Gruber (1993) explained the meaning of ontology in the engineering sense as the reality of concepts, relations or facts premised on the epistemological roots. The concept of ontology as an analytical theory for determining interrelationship is used by scientists to explain the process of formation of such functional relations among corresponding variables and entities.

A definition of ontology that comes nearest to our usage is also found in Sztompka (1991, p. 51) quoting Lloyd (1988, p. 34): “It is the task of science alone to reveal the general, hidden, structural features of phenomena, and the underlying mechanisms of their becoming.”

Thirdly, the epistemological (E) and ontological (O) levels must be encapsulated in capability and functioning. This functional level is called the level of evidences, which Heidegger (1988) referred to as Ontic (O). The emergent process comprises together the E-O-O phase of structured learning in knowledge-based systems according to unity of knowledge between their entities. Such a learning experience brings out the analytical, quantitative and empirical policy-theoretic study, followed by inferences, policy analysis and recommendations, program formulation, and the like. At every point and phase of heightened consciousness in the Universal Paradigm there is that indispensable relational causality between attained states of the variables and entities in given embedded systems. The role of institutions becomes instrumental in guiding the moral and social transformation in the preferred direction for attaining unity of knowledge by interaction and integration between learning entities and their relationships across various systems.

The E-O-O phases flow incessantly and continuously, as knowledge formation and its recursive induction in the systemic transformations emerge in the light of unity of knowledge as articulated by the monotheistic law. But at the end of every such phase of learning through the interconnection of states of the system under investigation together with institutional guidance, there comes about post-evaluation followed by automatic evolution (E) into fresh E-O-O learning phases to perpetuity.

The institutional post-evaluation of the degree of unity of knowledge gained in previous experience, which is a matter of simulation of a well-defined social wellbeing function examining the issues and problems at hand, charts the new paths of fresh evolutionary learning. This means that at the end of every learning ‘process’ and the commencement of a new one there must once again be the recalling of the foundational epistemology of oneness. The renewed ‘process’ then carries on the subsequent ontological and ontic phases of socio-scientific investigation.

Every fully co-evolved learning ‘process’ is thus completed by means of the E-O-O-E sequencing (i.e. Epistemological to Ontological to Ontic to New Epistemological beginning by Evolution). The re-commencement of the E-O-O-E processes coincides with a recalling of the epistemology of oneness along continuously emergent learning phases of learning.

 

The struggle to establish the Universal Paradigm

 

Realization of the Universal Paradigm under unity of divine knowledge (divine laws) in the world scene and the socio-scientific milieu requires vindication of the methodology so defined. The methodology is further reinforced by its proven results and public understanding. The last one is a matter of enacting and implementing positive policies. The policy and institutional impacts best commence at fresh junctures of awareness, consciousness and education.

In all likelihood, the convergence of world scientific search for consciousness is bound to move all scientific and analytical thinking in this direction. There are already rumblings from the sciences against the reductionism of the scientific discipline.

Modern science has assumed a hostile climate of opposition to God in favour of materialism (Dampier, 1961). This must change by an accommodative will and vision. Hence there will be a great role for positive discourse and understanding in realizing the great transformation to the Universal Paradigm. 

In the global scene, the development of the positive socio-scientific thinking will depend on a wider spectrum of dialogues, rather than holding zealously to preconceived ideas of science, religion, culture, regions and beliefs. Thus, in this book, according to the dynamics of the E-O-O-E process worldview, we promote a climate of global dialogue between civilizations in opposition to the mistaken idea of a global clash of civilizations (Huntington, 1993, 1995).

Yet in the end, it will be a fact that global transformation will be incremental in nature. In the worst case, this experience can ultimately end up in bifurcated understanding of the world, with one side based on unity of knowledge and the other on linearly differentiated and individuated perspectives of socio-scientific reality. If learning of whatever kind is kept alive in all civilizations then there will exist at least the impact of ideas on the differentiated world-systems to convert these into embedded and learning ones (Holton, 1988).

A great mind makes its advances a little at a time, not noticing the gains it has attained, until suddenly with an abrupt illumination it realizes its victory. Progressive but powerful enforcement in the knowledge domain is the surest way to break down the rigid structures that clothe the establishment today and thus to unlock the mysteries of truth. The Universal Paradigm is the worldview of this kind. It is enlightened by the unfailing worldview of unity of knowledge premised on the intrinsic monotheistic laws. The laws formalize the whole of socio-scientific thoughts and experiences, despite accepting diversity of issues and problems.

 

Structuring the E-O-O-E worldview of unity of knowledge

 

As mentioned above, the E-O-O-E is an intrinsic and automatic structure that is neither imposed nor concocted. It is natural and invincible to thought. That is because any thought must rely firstly on a premise. If the premise chosen is of unity of knowledge for the construction of the moral, ethical and social embedding, then worldly knowledge, life and experience must be premised on this very relevant epistemological premise. This is the meaning of Epistemology, the theory of knowledge that identifies and configures how a body of knowledge is derived and organized in order to address any set of issues, problems and questions within embedded systems with strong interaction between them (Smith,1992).

The most important problem of discerning the selection of Epistemology is to find the law, text and knowledge that most universally organize the worldview of unity of knowledge. The question stands: Can received philosophy of science establish the worldview of unity of knowledge? We will now answer this question from the socio-scientific and moral points of view.

The study of the existing body of knowledge of Eastern and Occidental world-systems shows that at their heart there is rationalism alone. That is to say, Reason is seen as the ultimate arbiter of knowledge, and God, though acknowledged for worship in many systems, remains outside the human domain. Even when a claim of socio-scientific and moral association with God is upheld, there is no means of cognate transmission from God to the world-systems to carry forward the divine law. Consequently, the reality of God remains subjectively dependent on human reason and perceptions. Thus the primal role of divine unity of knowledge and its capability and functioning enabled by the catalytic role of a medium other than the subjectivity of human rationalism, remains impossible in such a subjective mindspace.

Such is also the case with recent thinking on complexity and post-modernist epistemology given by Giddens (1983a), Wallerstein (1998), Heidegger (1962), Husserl (1965), Russell (2001) and the entire school of economic neoclassicism and political economy (Phelps, 1985) and in the idea of science as process (Darwin, 1936; Prigogine, 1980; Popper, 1972; Hull, 1988; Dawkins, 1976). The message derived from all of these ways of understanding the origins of knowledge is subjectively relegated to human rationalism. The impact on the philosophy of science including the moral law, the social order including economics and politics, and the natural sciences, saw the birth of a conflicting and differentiated understanding of human experience. The impact was felt equally on the hegemonic nature of science over culture and traditions and the political and technological domination over a natural way to pursue truth.

The politico-economic consequences of such ego-centred rationalism were many. They included, for example, the colonialism that governed and taxed the resources of India to fuel the industrial revolution of Europe. Marx’s over-determination epistemological theory likewise vouched for a theory of permanently disequilibrium and conflicting world-systems. Technology became the instrument of transference of the development, educational and political models from the West to the rest of the world by power and craft (Todaro and Smith, 2005).

During the eighteenth century European Enlightenment, knowledge was understood in its material sense of utility and power. In other words, epistemology was derived from the ultimate premise of human rationalism. The works and beliefs of scholastic thinkers like Aquinas (1946), Kant (1949), and Hume (1992) reflect their incapability of projecting God and oneness in a functional and capacitating way through logical formalism, into the living world-systems. Consequently, rationalism failed to reap the subtle socio-scientific experiences of attaining wellbeing in the holistic sense of unity of knowledge.

A prominent dualism between spiritual and material values emanated from Kant’s problem of heteronomy. Carnap (1966) wrote on Kant’s problem of heteronomy as the dichotomy entailing the following kinds of opposites: Pure Reason versus Practical Reason; a priori versus a posteriori; noumena versus phenomena; the sensate versus the intelligible; and moral imperative versus the sensate world. All these became non-conforming opposites.

These are examples of the nature of dichotomy that marred the possibility of mapping the divine law and it’s spanning of relations into diverse world-systems. Such dichotomy came about despite God being revered by Kant as the highest existent and the source of the moral imperative. The gap in knowledge caused by the absence of a transmission medium from Pure Reason, the seat of the moral imperative, onto Practical Reason − that is from noumena onto phenomena − marked the essential problem of scientific rationalism. Rationalism was opposite to unity of being. It militated against the unified and comprehensive phenomenology of knowledge. Indeed, scientific rationalism arose from Kant’s problem of heteronomy.

Moreover, even the Muslim scholastics fell under the influence of a similar kind of scientific rationalism. The famous Islamic scholar and epistemologist, Abu Hamid [Imam] Al-Ghazali (Marmura, 1997, p. 107, edited) wrote on the problem of the rationalist Islamic philosophers:

 

What is intended is to show your rationalist impotence in your claim of knowing the true nature of things through conclusive demonstrations, and to shed doubt on your claims. Once your impotence becomes manifest, then [one must point out that] there are among people those who hold that the realities of divine matters are not attained through rational reflection – indeed, that is not within human power to know them. For this reason, the giver of the law has said: ‘think on God’s creation and do not think on God’s essence.’ 

 

The structure of Tawhidi (oneness of God = unity of divine law) String Relation

 

Expression 3.1 delineates the Tawhidi String Relation (TSR) of Unity of Knowledge as the total phenomenology comprising the E-O-O-E phases of continuous learning processes. Expression 3.2 further extends the TSR to multi-dimensional space with knowledge induction of the emergent systemic variables and entities.

            The following symbols are defined:

W denotes super-cardinal topology representing the purity, fullness, perfection and absoluteness of knowledge in the divine law. In the Islamic epistemological sense, W comprises the source of the Qur’an in its primal form of completeness.

            Topology is a mathematical relationship that encompasses all forms of combinations of relations connecting things of the same or opposite type, including the limiting case of the total space W and its nullity denoted by f. W serves as the open cover of all its included subsets, subspaces and relations (Maddox, 1970).

            W is referred to as the super-cardinal topology because of its openness and super-encompassing nature with the power to explain all realities through relations of such entities in reference to the divine law. It is therefore, neither possible nor necessary to measure the super-cardinality of W.

The true, necessary and sufficient condition for W is to generate open sets of extensive relations based on the divine law. Such relations by generating knowledge-flows that induce the cognitive and material entities and relations, carry the principle of pervasive complementarities (unification) most extensively over the sub-spaces of W.

W is never comprehended fully by human knowledge, because of its super-cardinality and extensions of mappings of relations. These properties of W convey the dynamic nature of the recursive knowledge formation and knowledge-induced relations between complementary variables and entities.

            The measured veil of ignorance of human vision to know the fullness of W requires the mapping of quanta of knowledge-flows derived from the divine law as the epistemology. Such transmission of knowledge-flows contained in W onto the human order is realized by the existence of an intermediary mapping denoted by ‘S’. The role of ‘S’ in relation to W is the key point of understanding logical formalism of the unity of divine knowledge relating to the world-system. Continuity of the mapping of W by S to the world-system is contrary to the dichotomy between God and the world, as in the case of rationalism.

We have explained that if S were to be premised on rationalism, that which Heidegger and Husserl referred to as Dasein, then human subjectivity will re-enter the definition and derivation of knowledge-flows from the source of reductionism that is sheer materiality and dialectics. As we explained earlier, dialectics marks a mutative idea of incompleteness and evolution caused by means of conflict, competition and disequilibrium. Mutation is also the brand of scientific rationalism. The presence of human subjectivity in the project of rationalism delimits access to the ultimate oneness as the episteme. Thus in every aspect of Occidentalism the role of the divine law as the substantive premise of all world-systems is denied.

            In Islamic epistemology the transmission mapping ‘S’ must be of such a nature that it remains unsullied by human vagaries of rationalism. ‘S’ must also be capable of deriving knowledge-flows from the divine roots of W in a unique way. The result must enable construction and explanation of all world-system issues. Such a result arises from the combined properties of universality and uniqueness of the project of the Universal Paradigm.

‘S’ therefore denotes the guidance of Prophet Muhammad. These comprise the sayings and practices comprising the Sunnah. These are the only known record of prophetic guidance in the annals of religions to date. ‘S’ extracts the divine law from the primal source of W by the medium of rules. The inferences are further discoursed, explained and applied in the world-systems and in human experience.

            The tuple (W,S) thus forms the fundamental Islamic epistemology of divine unity, Tawhid, whose texts are the Qur’an (W) and the Sunnah (S). In the realm of mathematical logic, the confirmation of (W,S) by itself, as in the case of irreducibility of the divine truth of oneness of God reflected in the epistemology of unity of knowledge, represents the basis of its self-referencing (Godel, 1965). In other words, (W,S) recurs in every problem-delineation and problem-solving across the widening nexus of domains and continuums. This describes the phenomenon of the transmission mechanism that we refer to as ‘recalling’ of (W,S).

            {q} is the set of knowledge-flows derived from the epistemology of (W,S) through discursive mappings involving conceptualization, methodology and formalism of the system upon which explanation and problem-solving depend. This is the phase that firstly projects the state of the particular system. The states are then studied and alternatives selected by institutional discourse and choices for reforming the state variables as needed along the direction of systemic unity of knowledge as premised on and articulated by (W,S).

            This kind of conceptualization done by examining the existing state of things is the phase for the ontological principle. It leads to formalization and theory building. In concert with our earlier definition, ontology here means the being and becoming of a body of thought and concepts that emanate from the rules extracted from (W,S) through the socio-scientific discursive process.

            Let {X(q)} comprise mathematical vectors, matrices or tensors formed in complementary modes between the component elements as variables and entities. These determine the impact of embedded knowledge that gives these variables and entities their material meaning.

Leibniz (see Russell, 1990) in European Enlightenment and Imam Shatibi (Masud, 1994) on the side of Islamic Scholasticism understood the concept of ‘meaning’ of things in terms of certain forms of their relations in their domains of action. Shatibi understood the concept of ‘meaning’ in the sense of extension of knowledge shared between entities according to their responses to the divine law. This in essence implies conveying the epistemology of unity of knowledge premised on the divine law. Leibniz, a firm believer in the existence of God did not believe in extension of relations between variables and entities. He considered every entity to be independently endowed by its own ‘soul-like’ nature and behaviour, which Leibniz argued were primordially endowed by God in the entities.

In recent times, the theme of ‘meaning’ as part of the sociological project of rationality was taken up by Weber (see Mommsen, 1998) and Schutz (1970). The debate on what constitutes interpretive knowledge has been waged from both sides. Those who pronounced methodological individualism, specialization and independence between the disciplines were led by Weber. 

On the other hand, there are those who argued for a holistic society. This school was led by Durkheim (see Giddens, 1983b) and Lyotard (1984). ‘Meaning’ in the sociological sense is now translated in terms of making sense through functional relations between entities. This would explain causality between them. The kind of description as ‘meaning’ so conveyed takes the form of translating sociological reality by means of signs and complexes. Such a field of transliteration of meaning conveyed through relations is referred to as semiosis (Heiskala, 2003).

In the epistemology of unity of divine knowledge carried through by (W,S) onto the world-systems, which are formed by the spanning of knowledge-flows and their induced entities, the tuples denoted by {q,X(q)}, form the domain of formal and cognitive existences, ‘meanings’.

Within the principle of complementarities as the sure measure and explanation of unification between entities, {q,X(q)} are naturally designed by the divine law of oneness of God in the scheme of all things. Such a natural design of oneness in reality is referred to in the Qur’an as the conscious worshipping of God by all entities existing in complementary pairs. Some of these, for our understanding of the socio-scientific order, are the variables and agents of the material and abstract world-systems.

Such an intrinsic worshipping is referred to in the Qur’an as the dynamic experience of Tasbih in ‘everything’. The essence of recognizing the natural law as unity of the divine law in ‘everything’ is referred to as Fitra. Thus the world-systems, referred to in the Qur’an as Alameen, are continuously immersed in the worshipping of God’s oneness through their essence and in response to the primordial oneness of the divine law as the episteme that forms the unified world-systems. The laws equally explain the differentiated world-systems as contrary human artefacts of ‘de-knowledge’ (ignorance).

Along with the conceptualization and delineation of the domain, {q,X(q)}, pertaining to specific issues and problems under investigation, also come about the formalism underlying the study of underlying thematic issues. Such a program for studying the world-systems on the basis of the Tawhidi (Oneness) epistemic reference reflected in the learning interrelations between the {q,X(q)}-variables, appears as logical formalism. By the method of logical formalism the law of unity is rigorously applied to specific themes that are explained by {q,X(q)}-variables. The method of analysis in such unified and causally interrelated, complementary world-systems come about by means of circular causations between the learning domains of {q,X(q)}. Such learning domains induced by the q-values extend from simple interrelations to complex systemic ones. A mathematical or a discursive formal model develops at this first conceptual level, carrying the ‘meaning’ of oneness of the divine law in reference to the primordial epistemology of (W,S). Such a concept of ‘meaning’ in ‘everything’ is carried through the discursive medium for deriving knowledge-flows {q} arising from (W,S).

The sequential relationships generated by topological mappings between the respective inter-state relations are denoted by ® in the portion of the TSR, (W,S) ® {q} ® {q, X(q)}.

At the end of this simplified one-directional causation the objective criterion of wellbeing is evaluated. The method of such empirical evaluation is simulation. Simulation as opposed to optimization conveys relational learning that occurs continuously in the domain of {q, X(q)}, where {q} Î (W,S).

There is a further refined relation here that makes only W as the primordial and S as the transmission medium interconnecting W with {q, X(q)}. Thereby, (W ® S) is taken exogenously in the sense of ‘recalling’, which occurs continuously across continuums of systems, causing the ontology of being and becoming. Ontology is thus the formal representation of the thematic problems of world-systems spanned by {q, X(q)}.

            Now at the end of a specific learning process in the simulation experience, the simplified one-directional causation denoted by,

 

            (W ® S) ® {q} ® {X(q)}

 

is evaluated by carrying on the simulation exercise over {q,X(q)}-values .

This is done by simulating a criterion function called the Wellbeing Function, W(q, X(q)), in the {q, X(q)}-variables. The simulation exercise is done in reference to the circular causation relations between state variables, institutional variables and behavioural and policy variables. {q, X(q)} denote such state-institutional-policy-behavioural variables that are simulated to establish complementary interrelations signifying certain existent degrees of unity of knowledge between the {q, X(q)}-variables and their circular causal relations. This part of the formal simulation model assumes an elaborate structural system. It is made amenable to estimation by statistical methods dealing with learning coefficients and perturbations (Choudhury & Hossain, 2006).

            The above chain relation is now extended to the form,

 

(W ® S) ® [{q} ® {X(q)}®   Simulate_{q} W(q, X(q))]                       (3.1)

                                                                Subject to, structural set of circular

                                                                Causation between the {q, X(q)}-variables

                                                                Estimating and changing their unifying

                                                                Interrelations by computer-assisted methods.

 

            The bracketed sequence [.] in expression (3.1), forms a process of learning. It comprises conceptualization, formalism and a one-process evaluation of the entire phenomenological model of Tawhidi consciousness in respect to real problems and issues under investigation. The {q, X(q)}-variables within [.] learn continuously and across continuums in respect to the epistemology of {q} Î (W ® S). (W ® S) is primordial, and hence exogenous; but it is continuously ‘recalled’ in the on-going processes, as shown below. On the other hand, the unification of knowledge gained by continuous learning across continuums of interrelating systems establishes the multivariate and multidimensional knowledge-induced relations. These are persistently of the endogenous type.

            A particular completion of the simulation phase of (3.1) that closes a one-process evaluation by estimating the degree of consciousness in the systems, problems and issues under investigation, is called the ontic stage of the completed phenomenological model (Heidegger, 1988; Sherover, 1972). This part of the integral model marks the evidential phase in process 1. What is true of Process 1 is repeated at simulated levels of {q, X(q)}-variables in subsequent evolutionary processes caused by continuous learning in unity of knowledge over continuums.

            The recalling of the epistemology of Tawhid (unity of the divine law) causing evolutionary regeneration of processes like (3.1) is shown in expression (3.2).

 

     [Process 1]                            Evolutions: [Process 2] ® …       _________________________________________                                                               (3.2)

      ç                                                                                                                          ¯

(W ® S) ® [{q} ® {X(q)}                                                      Recalling ®

                                 ___¯__ Simulate_{q} W(q, X(q))]

Subject to, structural set of                            Continuity

                                                Circular causation between                          across

 {q,X(q)}-variables                                       continuums

 

                The evolutionary learning processes of expression (3.2) along simulated new levels of consciousness cause refined concepts and applications of the {q, X(q)}-variables to world-system issues and problems of specific kinds. Yet this kind of evolutionary learning dynamics is permanently premised on the law of divine unity that determines the entire phenomenological character.

To endow the evolutionary processes with this character of unification it is essential that the chain of processes in expression (3.2) must end up in a cumulative universe of perfect unification of knowledge along with the optimal values of the state-variables. Since this state of the evolutionary system cannot be attained by optimization, under any condition, both in the small and large-scale universes in temporal order, therefore, the only possibility for the closure of the learning universe is for W to attain itself.

            The necessary and sufficient condition for attaining unity of knowledge is summarized by the universal relation shown in expression (3.3). This expression summarizes the complete phenomenological model of the Tawhidi worldview.

 

The Tawhidi phenomenological worldview: Tawhidi String Relation (TSR)

 

            The necessary and sufficient conditions of expression (3.3) in establishing the complete phenomenological worldview as the Universal Paradigm can now be readily deduced. The singular axiom of every problem discussed within expression (3.3) is that the world-systems are centred on unity of knowledge, whose epistemology emanates from the foundation, (W ® S). All other aspects of TSR are derived consequences of the Tawhidi axiom.

 

Proof of necessary condition in the necessary and sufficient conditions of TSR

 

Firstly, we argue by assuming that expression (3.3) is true. This is the necessary condition. The implication then is that the simulation of the evolutionary learning system cannot end in space-time continuum. Consequently, there is no optimum in any real-world problem-solving case. Therefore, only acquired states of the problem-solving system exist in simulation. These states are caused by simulation in given processes, as the phenomenological methodology substantively explained by means of the E-O-O-E worldview, proceeds on in continuum.

Optimum in a continuously learning universe across its continuums of interrelating and unifying systems is possible only in two states that are unattainable by the world-systems. These states are either the instantaneous core of the system (e.g. theoretical markets, economy) or the ultimate two terminal closures of W (Beginning and End). These two ends mark the equivalent completion of all knowledge-flows and configure the ultimate attainment of the optimal blessing of {q, X(q)} in the form of optimal wellbeing. The Qur’an refers to this Event of the End as Akhira (the Hereafter). The Beginning is Tawhid as primordial. The optimal blessing caused by such closure of {q, X(q)} is referred to as Fauz al-Azim, the Supreme Felicity.  Likewise, the same kind of optimality is extant in primal creation. That is in the unity of the divine law. The Qur’an calls this state as the Event of the Beginning. The primordial states in the Beginning and the End are equivalent and are therefore both denoted by W.

In the first case, the case of instantaneous optimality is impossible and meaningless, for in the state of continuous learning across matter-mind domains of reality we cannot hold any interacting relation to remain constant. Quantum Physics has proven this fact for the sub-atomic worlds.

The other case is of the cumulative state of the End as for the case of the primordial state of the Beginning. By definition of the Hereafter in optimization calculus, the dimension of W now becomes super-cardinal. This denotes the dimensionality of the primal W, which is actualized in the Hereafter. Consequently, only relations between attained {q,X(q)}-values are possible only in the continuums between the two terminal states. No further evolution can occur in the two equivalent super-cardinal states of W. Therefore, W(.) is optimized only by the completion of knowledge in the super-cardinal domain of W equivalently at the End and the Beginning.

 

Proof of sufficiency condition in the necessary and sufficient conditions of TSR 

 

To prove the sufficiency case, we argue as follows: Let there be a tuple {q, X(q)} belonging to the TSR expression (3.3). Then such a tuple is governed by the divine law of unity of knowledge. All the simulation conditions apply.

If possible now, let a process-based simulation state end prior to W of the Hereafter (= Primal). Then an optimum for W(.) is attainable given the simulation relations. Consequently, W remains unrealized at the End. Likewise, W remains undefined in the Beginning, since expression (3.3) is then open with respect to W at the End. A truncation is now required to define the tuple {q, X(q)} in respect to optimizing W(.) within a truncated domain governed by expression (3.3) and not including W in the Beginning and the End. Now {q, X(q)} cannot be well-defined within expression (3.3), as given. We arrive at a contradiction. Therefore, in order for {q, X(q)} to exist with respect to expression (3.3), the TSR must be attained.

 

Properties of the E-O-O-E Tawhidi structure in learning models

  

The process-oriented continuity of expression (3.2) completes the E-O-O-E Tawhidi model of unity of the divine law (unity of knowledge).  There are a number of critical properties of learning in the interrelations of the circular causation structural relations of expression (3.2). We now explain these properties of evolutionary learning in unity of knowledge. We refer to expression (3.2).

            {q,X(q)}-variables in various mathematical definitions represent the multidimensional tuple combining state variables and institutional and behavioural variables. This combination necessitates that the tuple is formed by extensive discourse (Interaction) between the worshipping impulses (Tasbih) of the socio-scientific systems and the institutional-behavioural agencies.

The method towards attaining a final determination of consensus (Integration) to realize a limiting value of knowledge-flows emanating from the discursive sequences of knowledge-flows in any given learning and evaluation process goes through institutional discourse to derive such a limiting knowledge-flow value. Limiting knowledge-flows across evolutionary processes indicate levels of attained consciousness in the understanding of the rules derived from the epistemology of (W,S). The process-based evolution of the knowledge-flows, and thereby, of their induced variables simulates the Social Wellbeing Criterion to higher levels of relational unity. This is to say that the system attains higher stages of consciousness derived from the divine law of unity of knowledge.

Simulation of the Social Wellbeing Criterion under conditions of circular causation relations between the interacting variables now sets the evaluative point of the E-O-O-E learning processes. The circular causation between the variables of the Social Wellbeing Criterion implies the relational dynamics between the {q,X(q)}-variables for attaining higher levels of consciousness in the systemic unity of knowledge. The simulation method helps to transform an existing imperfect system into a more unified one. This stage gives the ontic (evidential) study connected with the knowledge-based simulation problem.

Up to the point of enacting logical formalism for evaluating the Social Wellbeing Criterion, we attain Interaction leading to Integration in the learning process. These occur in response to the simulation of knowledge-flows premised on (W,S). They are derived by the discursive learning dynamics. Subsequent to every process of learning involving Interaction leading to Integration there emerges fresh learning along evolutionary phases of the same type. Such phases continuously repeat the processual experience of gaining unity of knowledge by transforming the systemic relations into more unified ones across continuums.

            Hence the properties of learning in Tawhidi epistemology are Interaction (I) leading to Integration (I) leading to Evolution (E) – hence IIE. These properties characterize all learning processes of unity of knowledge. The processes exist in continuums of continuously learning variables and entities. These properties of learning apply to all kinds of socio-scientific world-systems in view of the proposition of universality and uniqueness of the Universal Paradigm mentioned in Chapter One.

Consequently, systemic unification on the basis of unity of divine knowledge is universally characterized by IIE-processes. The Tawhidi worldview in its complete phenomenological form now results in the IIE-process based methodology.

            The final delineation of the IIE-processes in view of the E-O-O-E parts of the TSR is this:

 

Epistemology (E) ® Ontology (O) ® Ontic (O) ® Evolutionary (E)

 

Non-Process Exogeneity                   Process-Based Endogeneity by Learning

(W,S)       ®                                            {q,X(q)}   ®            Evaluation ® Continuity                                                          

Interactive, Integrative and Evolutionary Field (IIE)

                                                                      (3.4)

 

Characterizing the project of the Universal Paradigm in TSR

 

The project of phenomenology as the study of consciousness reaches its ultimate height in an overarching knowledge enterprise when it attains its unique capability to deliver certain principal prospects. These comprise capability to generate well-defined laws, rules, relations and inferences premised on the most irreducible foundation of oneness of God (unity of knowledge).

The proof of such a methodological irreducibility follows the principle of self-referencing (Choudhury, 2002). The project must be capable of the widest possible coverage to apply its methodology, which we have claimed is the worldview. Also the same unique worldview methodology must address both the positive knowledge framework as well as the negative ‘de-knowledge’ framework. This signifies, as we have explained earlier, that the ‘meanings’ of Truth and Falsehood both ensue from the same unique and irreducible epistemology of Tawhid. The above points are clearly proven by the TSR.

Self-referencing is proven by the fact that continuing processes in expression (3.2) repeat the entire evolutionary learning process in the form of reflexive interrelationships between deductive and inductive reasoning involving circular causation between the variables. The epistemology of unity of knowledge premises the seat of laws, rules and behavioural traits on the specific texts (W,S). These are subjected to interpretation in a discursive medium.

Interpretation of the rules derived from the texts is done by the discursive medium called the Shura. The learning process of the Shura is equivalent to the IIE-process. The two equivalently use the method of interaction and integration (Ijtihad, search to reach consensus = Ijma). The same method of primal reference to the Tawhidi epistemology, its irreducibility and inferences derived there from by the interpretive experience, forms the core and periphery, respectively, of the Shari’ah (Islamic Law).

Extensive application of the Tawhidi worldview methodology is gained by realization of the entire E-O-O-E Process. The polity-theoretic perspective of such an experience measures the learning dynamics in unity of knowledge using circular causation at the ontic stage of quantification of the variables and their relations. Such a method arising from the TSR is applicable to an increasing range of socio-scientific concepts, models, issues and problems, as the TSR continues on to provide the necessary and sufficient conditions of deductive and inductive reasoning.

 

A brief reference to ‘de-knowledge dynamics’ according to TSR

 

The explanation of ‘de-knowledge’ (Choudhury, 2000) is done in the same way as for knowledge. Though in this case, rationalism, methodological individualism and Darwinian kind of mutation between locally limited interacting entities, leads to bundles of bifurcated forms. Now the totality that drives the ‘de-knowledge’ domain in respect of specific issues, problems and concepts comprise continuously bifurcating relations between entities. In reference to the Tawhidi worldview, such kinds of properties of differentiated world-systems and their specific concepts, problems and issues are well-defined by the divine law. Qur’anic law explains ‘de-knowledge’ as Falsehood. It denies the Signs of God as manifested by pervasive complementarities in terms of the Qur’anic principle of pairs.

            The Qur’an mentions three categories of natural impulses − Truth, Falsehood and Indeterminateness. These are further explicated by the Sunnah. Some of the verses of the Qur’an clearly state what is recommended and what is forbidden. These bring out the differences between truth and falsehood clearly. Some verses are silent on specific instances. In such cases, well-defined determination between Truth and Falsehood comes about by the studying the issues along the TSR. Learning processes that establish the complementary relations in the light of the law of unity of knowledge are categorized as truth. Those processes that differentiate knowledge, systems, variables and entities are categorized as falsehood. Such a process of deciphering between truth and falsehood remains incessant in continuum.

 

Conclusion

 

The worldview of the Universal Paradigm and its TSR-methodology were developed in this chapter in the framework of unity of divine knowledge (law). In the Islamic case, the Universal Paradigm is premised on the epistemology of Tawhid as the worldview. This chapter has brought out this methodology and its details in the form of the TSR.

The chapter has also proved how the Tawhidi worldview is a supra-revolutionary doctrine, and thereby, the worldview. In this direction of establishing the Tawhidi worldview as the Universal Paradigm a comparative and contrasting examination of other epistemological ideas in socio-scientific thought were examined.

Critical examination of these ideas led to the investigation on why and how the Tawhidi worldview stands out as the Universal Paradigm in the sense of the worldview. The concept of worldview was substantively explained in contrast to normal science, paradigm and scientific revolution.

           

IS INTEREST NECESSARY ( 1 )

BINARY AND ISLAMIC PERPECTIVE

 

1. INTRODUCTION

Marsudi&Rodney Shaekspeare

 

 

 

The collection of interest was forbidden by Christian and other religions under laws of usury. Usury (from the Latin usus meaning “used”) was defined originally as charging a fee for the use of money. This usually meant interest on loans, although charging a fee for changing money (as at a bureau de change) is included in the original meaning. After moderate-interest loans became an accepted part of the business world in the early modern age, the word has come to refer to the charging of unreasonable or relatively high rates of interest.

Usury laws are state laws that specify the maximum legal interest rate at which loans can be made. This makes most loansharking, another name for usury, illegal. Often, loansharks use illegal “scare” tactics to ensure that the lent money is paid back.

Usury is scriptually and doctrinally forbidden in many religions. Judaism forbids a Jew to lend at interest to another Jew. It’s forbidden in Islam. The most recent Catholic teaching on usury is by Pope Benedict XIV in his Vix Pervenit from 1745 which strictly forbids the practice, though many Jews, Catholics and Muslims break their own laws in this matter.

While Jewish law forbids the charging of interest to another Jew, Jews are not forbidden to charge interest on transactions to non-Jews. Throughout history, the interest attached to loans by Jews to non-Jews is widely considered to have been a central issue in causing a perception of usury, and contributing to a climate of anti-Semitism: Forceful confiscations of property, and discrimination toward Jews in business practice. Ethnic-based distinctions surrounding the application of interest charges are often perceived as pronounced, discriminatory and unjust, and can inflame existing ethnic divisions.

Usury has been denounced by almost every major spiritual leader and philosopher of the past three thousand yearsMohammed. Plato, Aristotle, Cato, Cicero, Seneca, Plutarch, Aquinas, Jesus, and Moses

 

2.                  WHAT IS INTEREST

The definition of interst according to http://webdictionary.co.uk is [n] - a fixed charge for borrowing money and according to http://dictionary.babylon.com The ratio, usually expressed as a percentage per annum, of the amount that a debtor has to pay to the creditor over a given period of time to the amount of the principal of the loan, deposit or debt security. The percentage of an amount of money whcih is paid for its use for a specified time.

But eccording to http://legal-dictionary.thefreedictionary.com, interest is n. 1) any and all, partial or total right to property or for the use of property, including an easement to pass over a neighboring parcel of land, the right to drill for oil, a possibility of acquiring title upon the happening of some event, or outright title. While most often referring to real property, one may have an interest in a business, a bank account, or any article. 2) the financial amount (money) paid by someone else for the use of a person’s money, as on a loan or debt, on a savings account in a bank, on a certificate of deposit, promissory note, or the amount due on a judgment. Interest is usually stated in writing at the time the money is loaned. There are variable rates of interest, particularly on savings accounts which depend on funding from the federal reserve or other banks and are controlled by the prevailing interest rates on those funds. Maximum interest rates on loans made by individuals are controlled by statute. To charge more than that rate is usury, the penalty for which may be the inability of a creditor to collect through the courts. The interest rates demanded by lending institutions are not so restricted. The maximum legal interest often granted by the courts on judgments is set by the law of the state. Simple interest is the annual rate charged for a loan, and compound interest includes interest upon interest during the year. 3) one’s involvement in business or activities or with an individual which is sufficient to create doubt about a witness being objective—damaging his/her credibility—or it is sufficient connection to give a person “standing” (the right based on interest in the outcome of the lawsuit or petition) to bring a lawsuit on a particular matter or act on behalf of other people. (See: real property, personal property, future interest, compound interest, standing)

Regarding the meaning of the word ‘interest’: It would be better to define the context of its use first, before discussing its meaning. Putting aside the true linguistic origins of the word, since ‘interest’ is currently an English word, then for our purposes - we should really use the English meaning of it only in financial & economic contexts.

[from: http://en.wikipedia.org/wiki/Interest] In finance, interest has three general definitions. Interest is a surcharge on the repayment of debt (borrowed money). Interest is the return derived from an investment. Interest is the right to one’s claim in a corporation, such as that of an owner or creditor.

In economics, interest is the return to capital achieved over time or as the result of an event. In population dynamics the rate of population growth (the interest rate) is sometimes referred to as the Malthusian parameter. This article covers the “financial” use of the term.

[from: www.investorwords.com/2531/interest.html] Definition 1,The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. Here, interest per year divided by principal amount, expressed as a percentage. also called interest rate. Definition 2,The return earned on an investment. Definition 3,Partial or total ownership in an asset.

[from: http://en.wikipedia.org/wiki/Interest] In common use the term “interest” is seen as rent paid for the use of money. As with any rental, the market price (or rate) is subject to change to reflect market conditions. The fraction by which the balances grow is called the interest rate. The original balance is called the principal. Interest rates are very closely watched indicators of a financial market, and have a dramatic effect on finance and economics.

The fact that lenders demand interest for loans can be attributed to the following reasons:

Time value of money or time preference (TVM: Having money now is more valuable than having it at some future time because interest is earned) (TP: Interest is the value borrowers place on having money now) Opportunity cost (OC: The cost in terms of options no longer available once one particular option is chosen)

We should narrow down the use of the generic term ‘interest’ to the more specific ‘interest rate’ and also accept the practical application of ‘interest rates’ as the Central banks of the English speaking and western European countries apply it. Thus: [from: http://en.wikipedia.org/wiki/Interest_rate] An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. Interest rates are normally expressed as a percentage over the period of one year. Interest rates are also a vital tool of monetary policy and are used to control variables like investment, inflation, and unemployment.

Thus, the meaning & definition of interest appropriate for our purposes is the one ‘in common use’ - which happens to be a “surcharge on the repayment of debt (borrowed money)”, “rent paid for the use of money”, “The fee charged by a lender to a borrower for the use of borrowed money”, etc. All of these definitions are actually for the more relevant and specific term, ‘interest rate’ - and are similar to my own definition, which is a monetary charge applied for the use of money).

Here, the surcharge, rent or fee is actually money, which is exchanged for more money (i.e with a contractual difference in the corresponding/counter values). Since any contractual difference in the value of 2 or more items of the same type, quality and value when they are exchanged (irrespective of the time-period involved or the type, magnitude or form of the difference) is Riba, it therefore follows that the surcharge, rent or fee (in this context) is also riba [as any such surcharge, rent or fee (i.e monetary charge) is an 'increase' or an 'excess' in a like-for-like (money-for-money exchange) - thus haraam].

Regarding the variations in the application and meaning of the word ‘interest’ in different countries & languages: This is really more to do with sociology rather then the financial sciences. This is really more to do with sociology rather then the financial sciences.

For instance:

Although in the German language “…jurists categorise rent as being interest (while rent is not riba, and in Dutch interest is event called rent) and accountants sometimes go as far as talking about interest on equity (which will finally confuse everybody to mix up profit with interest)…” - when the German and Dutch (and most other) central banks set the base interest rate, they set it as their monetary charge for lending to financial institutions, and not as the base property/asset rental amount, or equity dividend, etc. This alone should make clear the true meaning of interest (and the context of its use) for our purposes. All other meanings are culturally subjective and thus not suitable for our universal & legalistic use.

Although in the German language - when the German and Dutch (and most other) central banks set the base interest rate, they set it as their for lending to financial institutions, and not as the base property/asset rental amount, or equity dividend, etc. This alone should make clear the true meaning of interest (and the context of its use) for our purposes. All other meanings are culturally subjective and thus not suitable for our use.

In conclusion:

My own personal opinion still remains that ‘interest’ (the form in common English and use) and more specifically, ‘interest rates’ riba (as defined by the authentic sources), but riba (again, as defined by the authentic sources) is not restricted to ‘interest’.

 

3.                   HISTORY OF INTERST

The history of the interest phenomenon, (Luigi Frascati, therefore, http://ezinearticles.com ) begins with a very long period in which loan interest, or usury, alone is the subject of investigation. This period begins deep in ancient times and reaches down to the Eighteenth century. It is occupied with the contention of two opposing doctrines: the elder of the two is hostile to interest, while the later defends it. In the early stages of economic development there regularly appears a lively dislike to the taking of interest. Credit has still little place in production. Almost all loans are loans for consumption and are, as a rule, loans to people in distress. The creditor is usually rich, the debtor poor; and the former appears in the hateful light of a man who squeezes something from the little of the poor in the shape of interest to add to his own superfluous wealth.

It is no wonder, therefore, that both the Ancient World and the Christian Middle Ages were exceedingly unfavorable to usury. The Ancient World, in spite of some few economical flights, had never developed very much of a credit system and the Middle Ages, after the decay of the Roman culture, found themselves - in industry as in so many other things - thrown back to the circumstances of primitive times. As a result, in both eras several laws were enacted forbidding the taking of interest, or the paying of it.

Perhaps the Greek philosopher and thinker Aristotle in his book “Politics” is the most vociferous opponent of interest. Here is what he wrote : “Of the two sorts of money-making one, as I have just said, is a part of household management, the other is retail trade: the former necessary and honorable, the latter a kind of exchange which is justly censured; for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term usury, which means the birth of money from money, is applied to the breeding of money, because the off-spring resembles the parent. Wherefore of all modes of making money this is the most unnatural“. Quite a statement! One may want to bring this up to the attention of his banker when applying for a loan the next time around.

Aristotle’s thinking may be summed up this way: money is by nature incapable of bearing fruit. As such, the lender’s gain cannot come from the peculiar power of money. And, consequently, it can only come from a defrauding of the borrower. Interest is therefore a gain got by abuse and injustice (another point that can be discussed with a banker).

Things began to change somewhat under the Roman Empire, when economic exchange and trading of goods reached such complexity that gratuitous credit began not to make sense any longer. And yet even the Romans - perhaps in line with the theological credo of the time - put severe legal constraints to the amount of interest that could be charged. And to canonize these limits (which varied on a case-by-case basis), they were the first to publish a list of interest rates. This list grew more and more complicated with time, since the Senate thought that interest rates should be less for friendly countries and more for the unfriendly, thereby instating the first international economic agreements among countries of the Mediterranean Basin (though these economic ‘agreements’ where unilateral, i.e. imposed by Rome on to everyone else).

 

Things began progressively worse, however, following the break up of the Roman Empire and the advent of Christianity. In fact in the sacred writings of the New Testament were found certain passages which, as usually interpreted, seemed to contain a direct divine prohibition of the taking of interest. This was particularly true of the famous passage in Luke: “Lend, hoping for nothing in return” (third point one should point out to a banker). The powerful support which the spirit of the time, already hostile to interest, thus found in the express utterance of divine authority, gave it the power once more to draw legislation to its side. The Christian Church lent its arm. Step by step it managed to introduce the prohibition into legislation. First the taking of interest was forbidden by the Church, and allowed to the clergy only. Then it was forbidden to everyone, but still the prohibition only came from the Church. At last even the temporal legislation succumbed to the Church’s influence and gave its severe statutes the sanction of Roman Law.

The status quo remained cast into stone for the following fifteen centuries, until the advent of Mercantilism and of the Industrial Revolution. Here the monarchies of the time, most notably the Crown of England, decided to back private entrepreneurs with their own money. They chose to do so to gain a political and strategic edge over other monarchies and other states. And so as to encourage their own citizens not only to manually work, but also to think, they cheerfully invested large sums in the development of their inventions - some archaic but others of very practical application. In doing so, however, the monarchies wanted to reap also an economic profit and thus the modern concept of interest - both simple and compounded - was finally born.

Interest is the price paid for the use of savings over a given period of time(http://en.wikipedia.org/wiki/Interest_(finance) )In ancient biblical Israel, it was against the Law of Moses to charge interest on private loans. During the Middle Ages, time was considered to be property of God. Therefore, to charge interest was considered to be commerce with God’s property. Also, St. Thomas Aquinas, the leading theologian of the Catholic Church, argued that the charging of interest is wrong because it amounts to “double charging“, charging for both the thing and the use of the thing. The church regarded this as a sin of usury; nevertheless, this rule was never strictly obeyed and eroded gradually until it disappeared during the industrial revolution.

Usury has always been viewed negatively by the Roman Catholic Church. The Second Lateran Council condemned any repayment of a debt with more money than was originally loaned, the Council of Vienna explicitly prohibited usury and declared any legislation tolerant of usury to be heretical, and the first scholastics reproved the charging of interest. In the medieval economy, loans were entirely a consequence of necessity (bad harvests, fire in a workplace) and, under those conditions, it was considered morally reproachable to charge interest.

Interest has often been looked down upon in Islamic civilization as well, and most scholars agree that the Qur’an explicitly forbids the practice. Medieval jurists therefore developed several financial instruments to encourage responsible lending. These instruments sometimes closely resemble interest, leading some to wonder whether they truly satisfy the letter and spirit of the rule.

In the Renaissance era, greater mobility of people facilitated an increase in commerce and the appearance of appropriate conditions for entrepreneurs to start new, lucrative businesses. Given that borrowed money was no longer strictly for consumption but for production as well, it could not be viewed in the same manner. The School of Salamanca elaborated various reasons that justified the charging of interest. The person who received a loan benefited and one could consider interest as a premium paid for the risk taken by the loaning party. There was also the question of opportunity cost, in that the loaning party lost other possibilities of using the loaned money. Finally and perhaps most originally was the consideration of money itself as merchandise, and the use of one’s money as something for which one should receive a benefit in the form of interest.

 

BY: MARSUDI AND PROF. RODNEY SHAEKSPEARE ( CHRIATIAN ECONOMIST)

1.Doctorate degree (S3) on Islamic Economics & Finance Trisakti University

2.MM Program ( S2 ) Tarumanagara University (UNTAR) Jakarta, Marketing Management

3.Indraprasta PGRI University/STKIP PGRI Institute (S1) Jakarta, English Departement.

4.       Islamic Boarding School /Pondok Pesantren

5.Junior High School (MTs) and Senior High School (MA) at Al-Ihya Ulumaddin Kesugihan I Cilacap Central Java.

6.Roudlotul Mubtadiin  Islamic College Jember East Java.

7.Mafatihul Huda Islamic School – Kebumen Central Java.

8.Elementary School  (SD).Kebumen Central Java.

Activities 

1.Chairman of Induk Koperasi Pondok Pesantren ( INKOPONTREN )

2.General Chairman of Islamic boarding school assosiation for economic development (Asosiasi Pemberdayaan Ekonomi Pondok Pesantren (APEP)

3.Daarul Uchwah Islamic College Jakarta ( President Director )*

4.Barokaturrahman Islamic College Bekasi ( President Director )*

5.Koperasi Nasional Hakmitra Lingkar Mandiri (Treasury )*

6.Koperasi Majlis Ta’lim Bait Rahman ( Chairman )*

7.Lecturer of Fiq Mu’amalah on Azzahra University Jakarta

8.Lecturer of Ghozalian Economic Theory ( Al-Ihya Book ) Trisakti University Jakarta

Activities 

1.Chairman of Induk Koperasi Pondok Pesantren ( INKOPONTREN )

2.General Chairman of Islamic boarding school assosiation for economic development (Asosiasi Pemberdayaan Ekonomi Pondok Pesantren )

3.Daarul Uchwah Islamic College Jakarta ( President Director )*

4.Barokaturrahman Islamic College Bekasi ( President Director )*

5.Koperasi Nasional Hakmitra Lingkar Mandiri (Treasury )*

6.Koperasi Majlis Ta’lim Bait Rahman ( Chairman )*

7.Hak Mitra Group  ( Corporate secretary )*

8.Hak Mitra Lingkar Gatra. PT ( President Director )*

 

Organizations 

1.Chairman of DPP BISMA (Harmony Among the Followers of Religions Organization).*

2.Deputy Secretary of Nahdlatul Ulama (NU) DKI Jakarta.

3.General Secretary Gerakan Ganyang Narkoba ( GEGANA ) *

4.Secretary of Nahdlatul Ulama Economic Institution DKI Jakarta, 1997.

5.Chairman of PIP (Center for  Islamic College Information), 1998.

6.Chairman of Islamic Youth Preacher DKI Jakarta (Pemuda Ittihadul Muballighin)*

7.Chairman of DPP GARSANTARA (Islamic Student Organization).*

8.Secretary of Islamic Student Forum.*.

9.Chairman of Economic Movement for Islamic Boarding Shool ( Pondok pesantren )*

Experiences

1. Lecturer of Asshiddiqiyah Banking Academy, 1997.

2. Lecturer of Miftahul Huda Institute  (STIMA) Ciamis,1996.

3. Secretary of  Asshiddiqiyah Islamic College,  1996.

4. Assistant President Director of Asshiddiqiyah Islamic College Jakarta, 1997.

5.Overseas Making Speech:  China Moslem Society (Indonesian Embassy) 1999.

6.Pilgrimage / Hajj 2004

Foreign Languages : English and Arabic.

Note : *Up to now.

Jakarta, Dec, 01, 2008

MARSUDI