Examining Social Justice in Islamic Finance
The IBF industry’s exponential growth carries the echo of Agrama’s argument: its economic survival and growth is contingent upon defining and adhering to standards and recognizing uncertainty and complexity as business questions to be solved—not as questions of ontology. By first accepting the complexity of the IBF industry’s encounter with conventional capitalism, my paper engages with questions that remain unexamined, despite their high stakes for life on earth, the afterlife, and the allocation of wealth in both: What does an Islamically-informed ‘social justice’ mean in the present era of wealth inequality, financialization, and exposure of poor individuals and countries to global flows of capital?
I examine this both from the encounter of mature Islamic financial markets with ‘emerging,’ ‘developing,’ or poor Islamic finance markets, and from the encounter of a Bangladeshi Islamic bank with its poorest clientele, members of its Islamic microfinance program. This paper is based upon 18 months of anthropological research conducted from 2010 to 2015 that connects London barristers, the Islamic Development Bank in Saudi Arabia, the Dhaka headquarters of an immensely successful Bangladeshi Islamic bank, and that bank’s most economically marginal clients: small-town slum-dwellers participating in its Islamic microfinance program. During six months in Dhaka, I divided my time between the headquarters of the Islami Bank Bangladesh Limited (IBBL), Islamic economic institutions, and senior Islamic bankers and Shariah board members. During 12 months in a semi-rural slum community along the Bay of Bengal, I conducted full-time participant observation among the IBBL’s Islamic micofinance clients to understand their relationship to their Islamic microfinancing. A research trip to the Islamic Development Bank and attendance at multiple UK-based IBF industry events rounded out the multi-sited fieldwork.
Donor and NGO interest in Islamic microfinance is primarily located in the question of whether clients can derive economic value from Islamic microfinance exceeding the modest gains of conventional microfinance. In this paper, I consider presumptions and categories regarding the financial life-worlds of poor clients that come to frame the goals and ‘outcomes’ of Islamic microfinance. If poverty and Islam are presumed sufficient to engender a market for Islamic finance, what should be made of assumptions and possibilities contained in clients’ financial vocabularies, accounting practices in space and time, and understandings of present poverty in light of an anticipated afterlife? What becomes of slippages between institutional versus client understandings of the ‘Islam’ of Islamic microfinance?
I present ethnographic scenes and documents: clients renegotiating the terms of their financing and appealing to the field officer’s compassion; strategies of household accounting; the bank’s evaluation forms for new clients and Shariah compliance set against the financial vocabularies of clients, including the shifting and relational ways they understand and describe their own poverty and assets.
As these different calculative processes of the poor and of the Islamic bank are forced together, I examine what kind of calculative regime—and ultimately what kind of reality—results. In other words, what kind of ‘social justice’ is actually achieved? The forcing together of these two processes achieves visibility in certain settings and through certain technologies, namely, the weekly microfinance repayment meeting, and the bank’s evaluation forms for new clients and evaluation forms for the Shariah compliance of Islamic microfinance operations. I use “forcing” because these processes are not neutral. When bank field officers interact with the clients during repayment meetings, frustration, anger, and resentment are mutually experienced. And yet, the pain in these interactions must end in resolution: numbers, timeframes, and plans of action are agreed upon, entered into passbooks, or committed to often collective memory. Likewise, the language and demands of evaluation forms might lack mutual intelligibility with how the poor understand and discuss their poverty, wealth, and assets—but the forms must still be filled out in the end.
Through this line of inquiry, I address a second main question: what is the temporality of the social justice potential of Islamic finance? Is social justice inherent to the unique elements of Islamic finance and thus immediately accessible to poor clients, or is social justice of Islamic finance a future promise to be revealed in time? Making immediacy an ethical stance—locating ethics in the here and now—holds that social justice should be achieveable in the present, as well as in the future. I suggest that Islamic finance strives to encapsulate what I refer to as an “ethics of immediacy,” as the ethical stance of Islamic finance is spread across time: firstly in disbursing funds to meet some time-sensitive need, and secondly in a protracted repayment scheme protected from usury or other forms of exploitation common to the extension of financing.
Islamic microfinance might seem to most naturally embody an ethos of social justice. There is a power in invocations of poverty, as the existence of the poor allows the wealthy to fulfill certain religious duties. But perhaps examining the split between institutions focusing on technical Shariah compliance in contract forms versus those devoted to the social justice of Islam (El-Gamal 2006, Khan 1986, Lewis and Algaoud 2001, Vogel and Hayes 1998) is not the most crucial for assessing the social justice prospects of the IBF industry. Modern wealth inequality requires assessing the position of IBF in poor versus wealthy markets, theorizing timeframes of social justice, and taking seriously how poor clients’ calculative processes help shape Islamic financial realities.