Journal of Indonesian Economy and Business Volume 29, Number 3, 2014, 283 – 286

Book Review:

ISLAM AND THE MORAL ECONOMY: THE CHALLENGE OF

Sumiyana

Universitas Gadjah Mada ([email protected])

BOOK CONTENT the self-interest. The productive refers to the

Tripp (2006) presents a book titled: “ imaginative transformation of all the factors and and the Moral Economy: the Challenge of the process of creating value added. The Capitalism”. This book revealed that the productive leads imaginative transformation to development of economic grows rapidly, the high and satisfying economic growth. The depicting an evidence of a rejection of entire system of social and economic life is conventional capitalism. However, the growth referred to the high technology-based product’s is still hampered by the argument in the form of innovation to achieve the disparity of production economic development of world’s capitalism costs and profits. The institutional creates the that has rooted in the politic and economic imaginative and the productive into the high structure. According to the contradictions, the market competition, financial institutions, legal author presents a framework of arguments to and regulatory system and state area. identify and investigate the actions of Islamic Tripp (2006) continues the arguments of the economic actors in order to anticipate, respond system of social and economic capitalism. and act against the phenomenon. Furthermore, Market is not only a place to exchange goods Tripp (2006) elaborates the ’ and services through the financial system, but responses to the economy of capitalism as also it becomes a supreme institution and a follows. dominant metaphor of the entire social and First, the capitalism is seen as a political act economic transactions. The practical and system that serves as colonization of social and continue to the process of inhumanity. This is a economic life. This viewpoint is then clearly phenomenon that exists and becomes an referred as regime of capitalism based on existential threat. Islamic economic responds the individual property , which is functioned to phenomenon to take a self-consciously generate profit through employment system. moralizing position with the Islamic identity. Second, capitalism itself has been focused Islamic economic responses the experience primarily on the enterprise movement. This fear and turmoil as capitalism has rooted in the means that individual ownership becomes social community. The latter is proved by the greater through of a existence of social cohesion and capital production, finance, labor and other networks. expansion, the high pressure on labor union, and The movement of this enterprise is referred as a the urge on calculating social utility. This fundamental trait of business process of evidence also urges the necessity of Islam to capitalism. Third, the first and second concept compete against capitalism. The competing creates capitalism as a system of economic life, action is in the form of the establishment of the structures of the imaginative, the productive Islamic financial institutions and the concerns to and the institutional. The imaginative means the the ethical issues as well as the principles and economic role and human act in the orientation practices of Islam. Those facts become of rationality. The economic role and act always arguments which prove that the good refer to higher economic profit, its cost. Concept life of Islam is able to arise in related to the orientation of rationality is the middle of modernity of world capitalism. individual characteristic that refers to 284 Journal of Indonesian Economy and Business September

Tripp (2006) gives an opportunity to unite still allocates a portion of their budgets to sup- the Islamic economic and modern capitalism port the poor, homeless and so forth. Therefore, into a bowl of economy. Unity of Islamic and the U.S. with its capitalism takes part to shift the non-Islamic economic have been a step to ensure position of capitalism into . This proves the progress of civilization of the world econ- that between capitalism and socialism is not an omy because of its inability to distinguish option of paradigm or definitive concept as both between right and wrong. Economic unity also of them are just continuum point. shows both of them are able to complement each Second, Tripp (2006) suggests that other to solve problems of future social and capitalism is rooted on individual behavior economic life. concept that is shaped on self-interest explicitly.

However, he often defines and considers that COMMENTS AND CRTITICS: FALLACY capitalism is always rooted on selfish individual AND EQUIVOCAL ARGUMENTS behavior implicitly. The result of the study

This subsection reveals the results of the presents that Tripp (2006) formulates an odd and study by the author. The study results are based equivocal definitions, this can be referred as a on the denominators of the science that has been misnomer instead. studied universally at the university. The results Reviewer noted that the philosophy of of the study are as follows. science, economic and business ethic theorized First, Tripp (2006) argues capitalism and the individual behavior in the real world is socialism are economic concepts adopted by graded on the state of altruism, self-interest and states or social order to prosper the society. selfish. Likewise, individual acts inconsistently Capitalism is adopted by America and Europe. and not persistently in the paradigm for altruism, On the other hand, socialism leads to the concept self-interest and selfish. In other word, individual of Islamic economic, Christian socialist and changes the behavior based on the facts and Utopian socialist adopted by the Islamic context of the life he faces. Self-interest becomes countries in the Middle East, South and a choice and an assumption on the economic Southeast of Asia. This concept has an odd or concept, because individual is considered to act vague meaning. Furthermore, science has for the sake of his/her with social actually been formulated as an exact and welfare. In addition, economic dismisses altruism unequivocal so that capitalism and socialism is which assumes that individual is willing to a continuum point that should stand on the sacrifice for the sake of other individuals, and is opposite side, and both of them should belong selfish, which assume that individual achieves to each other or cannot be removed. State or his own welfare at the expense of others. social order has no ability to choose a point or Tripp (2006) presumes that capitalism is al- adopt a concept definitively. ways identical to the behavior of individual- A sound concept and practice indicates that selfish. Similarly, capitalism has framed the state and social order are getting closer to imaginatively and practically that individual choose a point. However, the chosen point is always does this. The point that becomes odd always unable to solve the social and economic and vague is that individual who embraces problems. Consequently, the choice is indefinite, capitalism, Islamic socialism, due to the state and social order that should shift and Christian socialism is more likely to act to the opposite continuum point. It can be altruism, self-interest and selfish since every referred to capitalism adopted by the U.S., which individual has a moral hazard. Individual action requires companies to run a corporate social should be based on morality and ethics that have responsibility in order to distribute five percent been rooted in every nation and all around the of its profit to increase income and to build world. Reviewer dismisses the suggestions public facilities. The U.S. acknowledges that from Tripp (2006). Instead, the so-called adopting capitalism might create individual in- conventional and modern capitalist nations have come gap. In other words, the U.S. recognizes been helping many Asian and African nations the market failure concept. In addition, the U.S. that are being hit by drought, and tsunami. In other words, the capitalist nations 2014 Sumiyana 285 are still running the concept of a fair and economicus, always in the three forms of actions civilized humanity. It is also supported by the that altruism, self-interest and selfish are evidence that capitalist nations always spend dependent on the probability of the condition and their national budget in order to help the poor the fact that he/she faces. Likewise, it is possible nations for the welfare of their people. if the self-interest adopted by capitalism is re- Reviewer concludes that capitalism do not placed by homo-islamicus according to the merely create human to act selfish. Human’s Islamic identity. However, the with selfish actions always exist, more likely or less their various compositions remain statistically likely, on every imaginative and practice of distributed in altruism, self-interest and selfish. capitalism and socialism. Furthermore, selfish It was explained on the second comments and actions are exacerbated by bad law, bad critics. governance, poverty and poor education of Fourth, Tripp (2006) theorizes that Islamic religion or moral and ethical. economic is faith-based community of Third, Tripp (2006) suggests that capitalism (human). He also suggests that the relationship becomes a center of idealism so that Islamic principal and agent using the faith-based. On the intellectualists attempt to challenge it. Islamic contrary, reviewer doubts this faith-based as intellectuals propose a new economic and social human behavior’s pattern has rules of concept based on Islamic identity to replace moral hazard. The agent can act bonding with the capitalism even for unification between capital- principal, conversely he can act shirking to the ism and Islamic identity. This Tripp’s arguments principal. In other word, the adverse selection (2006) are still over-generalization. It can be acting agent should choose actions that will shown that both capitalism and economic and optimizethe profit for the principal. However, social of Islamic identity are located on the in fact, the agent only considered the optimal concept of imaginative and practice, or on the profit for himself. individual behavior of businessmen. Reviewer agrees with Tripp (2006) that all Tripp (2006) should sharpen his argument, the agents act bonding. However, can such whether his concept would be replaced or be behavior happen? Reasoning of business world unified. If Islamic intellectuals replaced the should emerge the probability between yes and concept, imaginative and practice of today’s no. Reviewer formulates that the agent can act business, some questions would arise. In Islamic shirking with greatest probability. The visible nations itself, recent business development are evidences are budgetary slack, upper echelon using the concept, imaginative and practice based theory, racket principle and golden parachute on modern capitalism. It can be seen in Dubai, theory. All of the principles and theories state Emirates Arab; Doha, Qatar and so forth, that the that the agent always optimizes the profit for whole business is designed and developed based himself and stops when it has been achieved. on the concept, imaginative and practice of Reviewer proposes a reasoning that can capitalism. Actual evidence shows that some create a bad consequence for business practice. It companies are issuing long-term obligations, can be shown by the use of assumptions or offering shares to the public, using payroll and principles of faith-based community of ummah, compensation systems, and some other practices so that it leads the business proposals with using concept, imaginative and practice of probability to incur losses to always be capitalism. submitted to sharia banks. On the contrary, the On the other hand, if the Islamic intellectuals business proposals with probability to gain profit are willing to replace or unify the individual are to be submitted to conventional banks. Thus, behavior of businessmen, Tripp (2006) proposes if the business suffers losses, businessmen and a fallacy and equivocal arguments that have been sharia banks share the loss equally. Conversely, stated previously. This is related to whether the if the business earns profit, they earn high profit capitalism actors are always in their position to in conventional banks. Is it true that business act selfish. The answer is, human as homo- practice runs like that? This can be answered “maybe” since to date, the sharia banks, in the financial and economic 286 Journal of Indonesian Economy and Business September concept, still offer higher cost of lending than Capitalism" is full of fallacy and equivocation. that of conventional banks. Obviously, it is directed to challenge capitalism Last, Tripp (2006) theorizes that interest is or anti-capitalism. This book is not appropriate usury in Islamic economic concept. This theory enough when it is read by university students can be deemed as the foundation of anti-capital- who do not have adequate knowledge of the ism. Sharia banks then pretend to not recognize entire cumulative comprehensive scientific or do the bank interest. Sharia banks undertake a not have a fundamental phylosophies. The con- concept called agreed-interest. This sort of sequences could be worse that the emergence of manipulation of Islamic sharia accounting the contemporary Islamic scientists only admit becomes very interesting to learn. Is it caused by the truth of the paradigm itself or even the the essence and the real substance? Furthermore, appearance of fascism. the re- viewer presents an example to clarify this Reviewer gives evidence or phenomena that condition. A man bought a car worth 200 occurs in today's business practice. Evidence and million at the automobile dealer. Unable to pay this phenomenon are gaining more attention. in cash, he and the car dealer then agreed to pay Sharia banks currently have a lot of customers, with third party intervention, which is sharia especially depositors who are non-Muslims. If bank. Auto- mobile dealer earned a cash payment they all put their money in the bank not based on from sharia bank amounted to 200 million, the concept of socialism and Islamic law, they then the buyer and the sharia bank made a are supposed to use economic and financial transaction agreement based on the principles and concepts in real terms with the principle of rules of Islamic economic. The deal was five utilitarianism, which means a higher profit than years payment with a total amount of 300 cost that were sacrificed. This suggests that the million, consisting of 200 million car price and utilitarian principle remains to be excellent for 100 million as the agreed interest for the next all users of the bank. Thus, the economic concept five years. The buyer should repay the debt of Islamic socialism that against the capitalism totaled 5 million per month for the next 60 users are not yet matched with the concept of months. utilitarianism in the sense of modern capitalism. Financing practice of sharia banks is rightly On the other hand, this book is very so. Reviewer interprets that in fact, the agreed interesting as a teaching material at a university profit equal to the interest for the next five years. on a master and doctorate level particularly for Therefore, reviewer suggests that the practice of accounting theory and behavioral research in Islamic economic and finance has no different accounting. The reason is a form of contradiction from the economic and finance of conventional to the entire accounting theories and theories of banks. The difference lies only on the finance organizational behavior. Such contradictions item. Academic assessment to the difference should be the center of attention of the students lies in the amount of the agreed profit according in order to make them more mature in science. to sharia banks and the amount of the interest Lastly, that contradiction learning is to reduce according to conventional banks. Reviewer the probability of the student who become concludes that when the agreed profit is higher contemporary scientist or have a fascism belief. than the conventional banks’ interest, then the excess amount is more likely to be called REFERENCE usury. Then, who is earning usury? Tripp, Charless (2006). Islam and the Moral Economy: the Challenge of Capitalism. CLOSING Cambridge: Cambridge University Press. Reviewer concludes that the book titled "Islam and the Moral Economy: the Challenge of