A WEEK IN ECONOMICS (17/09/13 – 23/09/13) GOD HAS SENT ME TO PERFECT GOOD MANNERS AND TO DO GOOD DEEDS

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Week-in-Economics

“God has sent me to perfect good manners and to do good deeds”. So described the Prophet Muhammad of his mission. But this is forgotten by critics and Muslims alike. Islam, today, has adopted a legalistic tone; at least the manner in which it is portrayed in the media. The niqab in the western world, the parameters of jihad and whether mortgages are acceptable, are all contentious and oft debated topics.  But very rarely is Islam associated with encouraging good character.

What does it mean to have good character? Are there general overarching characteristics that can be considered good? As a simple answer, perhaps the Christian message of “Do unto others as you want to be done unto oneself” is an adequate adage as it encompasses the concepts of gentleness, kindness, consideration and fairness.  Only a sadistic man would want be treated violently.

Bad character would contain one or many of the characteristics mentioned above, but their opposite. It would also include lying, cheating, fraud, dissimilitude, arrogance and aggression. The question then becomes: after definition, can good characteristics be inculcated and negative ones reduced?

The last century saw the conflict between capitalist democracy and centralist planned communism. The underlying principles of the latter were social harmony: everyone was equal. The former ideology recognized the differences between individuals and encouraged people to work for their own self interest.  Ostensibly, communism is about equality; capitalism is about hierarchy. The former should have succeeded as a predominant mode of thinking. It did not.

Capitalism succeeded because it made the assumption that people would eventually see it in their self interest NOT to oppress individuals to better one’s life. Everyone contributes to the betterment of society by utilizing their skills for certain objectives. The idea of specialization works hand in hand with self interest.

Yet in encouraging self interest, bad characteristics can shine. Usually, they synergise with the good. The American steel magnate, Andrew Carnegie, was a philanthropist . He was also a brutal manager, enforcing tough working conditions at a low wage in order to boost profits. No man is exclusively bad, but the negative characteristics might be sufficiently strong as to have a detrimental effect on society.

School and family are the first vanguard against developing bad character. A curious mix of the stick and the carrot, children are disciplined early on. In the workplace, there is a modern preoccupation with ethics, corporate governance and social responsibility. The training of accountants, bankers and lawyers includes ethical guidelines. This can be considered ‘soft law’ as the rules are meant to be persuasive.

‘Hard law’ is meant to be enforced through the fear of punishment. Regulatory bodies such as the Competition Commission or the Prudential Regulatory Authority attempt to set the boundaries of acceptable practice. Failing to follow results in fines and even imprisonment. More importantly, by knowing what one cannot do, the hope is that there is an osmosis in which all members of a company are aware that certain actions are prohibited and discouraged; they should see it as negative, and this opposes the development of bad character.

But with increasingly more regulation in both the financial and the commercial spheres due to  malfeasance, it would appear that the checks and balances intended to restrain the worst aspects of human character are not working resulting in more hard law. There is a failure of the participant actors to have acceptable regard to customers and wider society.

The increase in rules shows that there is something inherently wrong with these participant actors.  The problem is that most companies working with a capitalist ethos, the bottom line is building profits.  Anything that opposes this is problematic, because profits means wages, wages means sustenance. No profits equal no company equal no wages. Individuals within companies are then encouraged to think in the same way, to adopt that culture.

There is a common thinking that in the freedom of contract both parties should negotiate a deal that is beneficial for both parties.  However, many parties are compelled to accept the terms of the other due to their size and power. Garment workers in Bangladesh have little say in their wages and conditions. Their wages are low, but they have to undertake the work as those low wages are higher than in other jobs. There might be freedom of contract; there may be little freedom of manoeuvre.

It is for the big organisations to have more of a social conscience, even if it means reduced profits. But in an increasingly competitive world, this is a concept that is scoffed at if it hinders the bottom line. The way forward is to ensure that the decision makers of these companies balance both the profit motif and societal interest, an uneasy balance but not impossible. It starts from the bottom, where the people have the good character to realize the negative actions of the company.

This brings us back to Islam. Improving character was never considered one of common sense. It required hard work, occasionally a divorce from the world in order to “purify the heart”. The world, however, was considered a sprightly devil, there to tempt and cajole, and thus building the defenses  required training. Once strong, then a person was in a better position to encounter the world and make a change. Nowadays we never seem to have much time to do anything, let alone improving character. But as the Quran says: “By time, verily man is in loss, except the ones who trust and believe, and perform good works and enjoin upon each other the truth and patience.” In this pithy verse, self interest (good works, trust and belief) conjuncts with social solidarity. That is the essence of good character and can reform society and economic relationships greatly.

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