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new middle class key to islamic capitalism

Friday 14 May, 2010

The Chicago Council on Global Affairs sponsored this event THE RISE OF ISLAMIC CAPITALISM: WHY THE NEW MIDDLE CLASS IS KEY TO DEFEATING EXTREMISM featuring Vali Nasr @ Tufts U.  Here’s what he had to say:

Is changing religion necessary for Islamic reform?  If so, does everything else change too?  Nasr is not convinced.  Early Protestantism was very rigid, not unlike the Taliban today.  Economics is at the heart of the problem.  Closed systems don’t create jobs, & keep the few @ the top & many @ the bottom.  It’s not that Muslims have too many poor as much as they have too little middle class.  Trade & commerce in the forms of market reforms & entrepreneurship, not reformation, will lead to change.  No other religion is outside of the global economy (excluding oil) & not a part of global supply chains.

A couple of countries are adopting some western values which could serve as examples for other countries, Dubai & Turkey.  Dubai, which is a cross between Las Vegas, Rodeo Dr., & Disneyland,  has grown by opening to the world, accepting foreign direct investment,  & creating a business-friendly environment.  Part of the reason for Dubai’s success was they had the least oil of all Arab Emirates, so they had to figure out other ways to make money.   They created the right regulatory environment & provided a proof-of-concept for capitalism for Muslims.  Their failures today are failures of management, not faith or culture.  Dubai was the most desired country to visit up until 2009-there they can pray @ 5-star mosques.

Turkey grows through old-school secularism, although religion is returning.  Turkey is integrated into the European Union economically if not politically, & hence into the global economy.  The country is like Greece many years ago-they got an IMF package & made some big changes then too.  The Anatoli tigers outside of Istambul are religious capitalists-1 small town in Turkey makes 7% of the world’s denim blue jeans.  Pious businessmen line up their Mercedes outside of the mosques to pray.  Religion is creating value, not jihad.  Market forces have forced change in religion & business from the bottom-up.

The middle class is growing in Pakistan as well.  It owns industry, the media, & politics.  The military has taken action against leaders who focused too much on religion.  The government now must listen to the middle class.

Education is moving from seminaries to other middle class locations.  Cultural consumption is changing & catering to the middle class.  Self-help evangelists now preach in halls in London, while they were too threatening in Egypt.  Problems will disappear with market forces & a middle class anchor.  Tony Blair said Muslims will learn to share our values as they become part of the global economy.

Q&A

  • Economic reform must preclude democratization.
  • Extracting minerals & oil does not help the middle class.
  • Although a few terrorists came from the middle class in the U.S., the key is to get the middle class as a whole to be less interested in terrorism.
  • Islamic finance is growing, but not everyplace @ once.
  • Indonesia is leaving OPEC because their oil exports are down, but as they are opening up, their economy is continuing to grow.
  • Although more Turkeys will create a bandwagon effect, there will be reversals.
  • Muslims are large & diverse-we tend to help the poorest:  maybe we should help the successful become more successful & set better examples.
  • Saudi Arabia is not a trendsetter:  Egypt, Morocco, Jordan are better examples.
  • A middle class has developed in 15 years, & Turkey’s & India’s middle classes started in the 1980’s.
  • While there is political resistance to a growing middle class in some countries, international pressure helps.  We don’t understand Islam, but we do understand capitalism & business.
  • There are distribution of wealth & environmental issues with a rising middle class.
  • Ideology is not unchangeable.  India used to be an opponent-now they are a partner.
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