İSTANBUL SABAHATTİN ZAİM UNIVERSITY
SPEECH AT THE ISLAMIC ECONOMICS AND FINANCE CONFERENCE
Honourable Rector, My Esteemed Presidents, Distinguished Representatives of the Business and Academic World, My Dear Student Brothers and Sisters and you, Esteemed Members of the Press, I take pleasure and honour in being together with you at such an exceptional Summit and, proceeding from the principle that the production of knowledge passes through sharing, in presenting my views on such an important subject that will be strengthened by your contributions. May God be pleased with everyone who has laboured for it. I greet you all with respect and affection. As-salamu alaykum wa rahmatullah.
Before beginning my speech, I commemorate with mercy and gratitude our esteemed teacher Sabri Orman, who broadened our horizons with his valuable work in the field of Islamic Economics in our country and who recently passed away. May God make his abode Paradise.
Distinguished Participants,
That the economic conditions and possibilities of an interest-free system are being addressed at a summit with such broad participation and such a wide range of stakeholders is a particular source of joy and pride for us.
For in the year I took over the office of President of MÜSİAD, at the Global Participation Finance Summit (GPAS) that we organized, we underlined how vital an element an interest-free system, that is, humane finance, would prove to be in the chaotic world order awaiting us in the near future.
At the summit we held on 16 November 2017 at the Haliç Congress Center with broad international participation, we had deliberated over which of the concepts “Islamic Finance” and “Humane Finance” to use.
For at that time the conjuncture was not as favourable as it is today. Yet we did not forget one thing: everything that is humane is Islamic, and everything that is Islamic serves the human being. Islamic economics is not the economic model of a colonialist mentality driven by the greed for gain and rent; it is the grassroots-fed economic model of a mentality founded on production and just distribution that places the human being at its centre.
At that summit, taking this fundamental principle as our basis, we set out with the peace of mind that comes from doing the right thing at a risky moment. Today I see that,
at such a colossal Summit, the parties to the subject from every front are, with their valuable ideas, experiencing for the 12th time the justified pride of discussing and putting into practice not what is, but what ought to be. This is what befits us. Distinguished Guests, Our Esteemed Professors,
Before delivering this speech today, I looked back at the conjuncture of Türkiye and the world in that period. At that time, in many forums and at the GPAS summit, we had asked the same question: Where are we heading? We had questioned how money had drifted away from its defining value. We had questioned the position and value systematics of money within the principle of the efficient management of scarce resources, the fundamental rule of the science of economics. Some three years ago we had insistently underlined that the monetary system, if it continued in this way, would reach the point of collapse. We had said that in the process which prepared the 2008 crisis and deepened after it, the understanding based on production had given way to a vicious circle in which, on the basis of balancing the financial markets, all sectoral balances were made to work in favour of the financial markets, and that one day this circle would reach the point of blockage and explosion.
Because if we wish to set strategies for the future, we must read history correctly.
Look;
World history moves into a different period and undergoes a transformation every 20 years. It revises itself every two decades. If we take only the 20th century: between 1900 and 1920 the dominant powers of the industrial revolution entered a fierce war in order to entrench capitalism. The First World War rewrote the rules of world economic history and the borders of countries were drawn. We can say that the foundations of many of the geopolitical impasses that even we experience today were in fact laid within those 20 years. During those 20 years Türkiye was waging its own struggle for national liberation and independence and was almost entirely a player outside the system.
When we examine the period between 1920 and 1940, the economic depression of 1929 caused us to reconsider the existing processes. In the 1920s American dominance had made itself felt in the global system. In this period American banks, which carried out deposit operations and investment activities together, had begun to take the place of British banks. The world system, under strain, found itself in the middle of a second war in 1939, and this time the way was opened for wars of hegemony.
After the Great Depression, financial controllers took the stage because of free entry into the financial markets, balance-of-payments problems in countries, capital flight and debt burdens. In this period we were occupied with the integration of a renewed country into a new form of government.
When we examine the period between 1940 and 1960, we saw that with the Marshall Plan and the Bretton Woods system the independent economies of countries were brought one by one under guidance. In those 20 years Türkiye had been compelled to integrate into its own country the dominant financial system coming from the West.
When we look at the period between 1960 and 1980, the Eurodollar markets, together with the oil shock, had become the centre of global finance. The quadrupling of the oil price in 1973 following the Yom Kippur War, and its tripling with the Iranian Revolution in 1979 and Iraq's threatening of Iran in 1980, led to a profound shaking of the flow of global finance. Thus the world returned to the approach of 1973, which made the state a prerequisite for development. In this phase we were living through the processes of coups and memoranda. We virtually prepared the ground for a mentality incapable of attaining democratic maturity to make us economically dependent on the outside. The period between 1980 and 2000 heralded a transformation rarely matched in the world. In the years following the end of the Cold War, the world became acquainted with a new economic definition and a whole set of attitudes, both through the differentiation of political understanding and conditions in the international arena and through rarely matched progress in technology. International socio-political relations that until then had been based on the nation and the pact, that is, on the region, gradually gave way to a global inquiry into production and prosperity that accepted all the nations of the world as its interlocutor.
Yet globalization was not a final outcome; on the contrary, it was a transition-period economy. Today we see the truth of this hypothesis in the economic attitudes displayed during the Corona period.
The defenders of the World System used to define the global financial system as an “illusion” created by the class forces dominating the economy, restricting the freedom of movement of states in the international arena and, on the same plane, taking the place of state strategies. Today this group states, in a far louder voice, that “the existing economic system, even with neo-Keynesian regulations, is far from bringing countries and nations closer together and turning economic relations into global prosperity. Did we not witness this at close hand during the Corona period?
Did we not see that the oligarchic financial system revolving around corporatization and branding led to deeper and more destructive divisions and economic chasms among the nation, and even destroyed the fundamental element of trust in the trading system? How, then, did globalization, so harshly criticized in its time, manage to find such favourable ground for itself? Because it presented the discourses of free trade and free movement, under the guise of democracy, as an advantage in favour of the developing countries. Or it supported such a perception through the financial system.
Yet the same system also brought with it uniform rules, that is, standardization in the eyes of all the nations of the world. Uniform cultural currents even subjected the cultural codes that nations had developed throughout their histories to a grading within the concept of “civilization”.
Unfortunately, from this point onwards the fundamental elements of the real economy such as production, employment and social welfare lost their importance and began to surrender to money and the financial system built around it. In other words, the process of managing economic policies through financial instruments began. The derivative began to take the place of the real.
The years between 2000 and 2020, on the other hand, pointed to a process in which not only the monetary system but money itself was paradigmatically redefined. The process that began with the September 11 attacks in fact became the starting point of brand-new struggles for hegemony, and in time China joined the game as a giant player. With China's entry, economic production and supply lines also began to shift increasingly eastwards.
Distinguished Guests and Participants,
Today we are losing ourselves in the risk simulations of a new world in which a promissory note is taken as a commodity and every institution will have the authority to create its own money. In other words, we produce money instead of commodities. Indeed, we can openly say that we produce interest instead of money. The more we do this, that is, the more we think of all economic activity valued through money solely around the time value of money, the more we give up the other two markets of economic activity: labour and raw materials. That is, the human being and production.
Distinguished Guests,
Cash, demand deposits, assets convertible into cash, and various instruments that can function like money when needed… In other words, funds. Funds are the basic instruments of finance. However, every fund and the transactions that follow it move within a constraint called time value. Because the fundamental aim in finance is to meet the requirements not of today but of tomorrow. That is, to minimize risks and to preserve the time value of money. In this respect, financial transactions are in fact simulations. Even reinsurance, the ultimate point reached by collateral and risk management, has in fact drifted far away from risk management and is drowning before the concept of “time value”. An equation in which the unforeseeable among foreseeable risks is foreseen. That, in brief, is the definition. Rather complicated, is it not? It is actually simple: the system has now merely become the simulation of a simulation. This is precisely the starting point of humane finance and Islamic economics: to call back the real parameters of real life, which we have abandoned to vanish within simulations. What are they? Resources and the uses of resources, raw materials, production processes, the labour force, investment for the sake of producing, saving, investment for the sake of saving, distribution, and the channelling of distribution back into production and investment. To rebuild the cycle not around money and interest but around goods and services. Not to destroy the financial system, but to open a new path for its blocked line. Not to inflate an imaginary bubble by ignoring the concepts of the need for funds, valuation or time value, but to rethink the basic concepts of finance from a humane perspective.
Otherwise, in a system that acts solely out of concern for financial rent, the markets of production, raw materials and labour will be squandered merely for the sake of feeding the financial system, and indeed they are being squandered. The ever-widening chasm in income distribution, the army of the unemployed and the problems of monopolization in supply chains all stem from this imbalance and from a wrongly constructed algorithm.
To set out the possibilities of a new economic mentality that respects the beliefs and ways of life of societies. To exercise the right to freedom of economic activity, without forgetting risk management, in this new millennium of ours in which the concept of freedom has gained such prestige.
This is the understanding of humane and Islamic finance…
Distinguished Guests and Participants,
Today, after 102 years, the world has once again begun to question its own economic system because of a health problem it has not been able to bring under control. Modern capitalism, which has experienced dozens of economic crises in only 30 years, this time faced an economic depression that is not economic in origin but whose effects deepen with each passing day. The liberal wing that defends globalization, the radical pole absolutely opposed to it and even the realist segment that follows global development cautiously all appear today to have reached a consensus on the same problematic: “Corona is a turning point. We need new conceptualizations and new paradigms”.
Today the executives of the IMF and the World Bank are now openly voicing the need for a “new Bretoon Woods” system. That system was a framework devised, under the patronage of the developed countries, for constructing an international monetary administration system in the wake of the destruction of the Second World War and for determining the commercial conditions required for a supposed revival. The Corona period has also shown us how fragile this framework is. If we are speaking of a turning point, then does thinking with the old paradigms of the previous century not push us towards positioning ourselves once again within the same vicious circle? It is now clear that the complete erasure of the effects of the pandemic from the world economy will last until 2021. This process is directly proportional both to the discovery of the vaccine and to the reflexes that nations will show towards the conditions of the new normal. Yet there is another point here that must not be forgotten: a second cold war process. In a process in which the parties this time will be China and the USA, the conditions of a new type of colonialism are already being created.
Look, Distinguished Guests;
The political struggle once waged over the Mediterranean now additionally encompasses the division of the Asia-Pacific. In a period in which the classical land-dominance theories are gradually losing their validity, both the Belt and Road Project and the Spice Road route, its counterpart and at the same time regarded as a buffer force against Chinese influence, connect us through Mediterranean geopolitics to the Asia-Pacific hinterland and make us a party to this division.
In other words, this makes Türkiye a key country both in the diversification of supply chains and, in this period in which we have seen how an epidemic that began in China locked down the world economically, in the distribution and management of risks as well as in the restructuring of logistics lines.
In this sense, if our country makes good use of this period, it will grow stronger once again as a safe and reputable harbour within the financial system as well. This is possible only by not thinking of investment as the management of a purely financial process, but by regarding production, and investment along the trade line, as a catalyst under the heading of production-trade-investment synchronization. For Türkiye, besides being the meeting point of continents and civilizations, now also lies within the hinterland of the economic power struggles shifting eastwards.
Distinguished Guests,
A brand-new world order awaits us. We have no time to lose thinking with old concepts. Change will not take place in the economic arena alone.
First of all, our ways of life and our perception of socialization will change. This change will leave us face to face with a new working order and a new set of regulations in economic life
We will need to redefine the relationship between our value system and the public sphere. In this process, for sustainable human development, every nation must review its own system of values and economic life must be designed in a manner respectful of those values.
We need a new paradigm of economic production and distribution so that production, supply and value chains are distributed justly among all the countries of the world. This crisis has shown us that China alone, or countries that hold production and supply chains in their hands alone on a sectoral basis, together with the economic system that supports this, fell into a void in times of crisis. For this reason, a multi-participant sharing system in which almost every nation can take part in global output with its own economic values awaits us. Because the economic contraction that will be experienced in the post-Corona period will also trigger a global impoverishment. In this respect, global prosperity must be redefined and its conditions must be determined anew.
Our ways of conducting politics will change. During and after this period, the world is testing a direct democracy that is leader-based but grows stronger by drawing power from the grassroots.
We have seen how a participatory yet pluralist structure, with the momentum coming from leaders and their grassroots forces, yields successful results in times of crisis.
Our definitions of education and our scholastic education systems will change. We can say that a new model of education and economic management now awaits us, one in which remote access facilities are used effectively and in which qualified human resources are trained in multiple disciplines in this way.
A period awaits us in which we will question the conceptual balance between science and religion and redraw the boundaries of positivism. The world is coming to understand that, within the triangle of science, religion and moral values, it can walk neither along a strictly positivist line nor along one entirely closed to the world.
The relationship we have established with the environment and with nature must be redesigned, and we must once again enter into a covenant of mercy and accord between ourselves and nature. In this period we have seen once more that nature is one of the most precious trusts entrusted to us by Almighty God. Our conventional elements of national power will change. We are seeing how the elements of national power that we once defined as land, capital and military dominance have diversified, and how new concepts have entered the spectrum of national threats.
A fine saying of İsmet Özel goes: “Everything has a price. Let those who say they have given you peace also say what they have taken from you”.
China is today perceived as the domino force of trade in many fields. Yet this situation must not make us forget the approaching footsteps of a new East-centred hegemony.
Moreover, in terms of both population and geopolitical positioning, this new power is a far more immediate threat compared with the overseas interventions of the distant continent. Likewise, when the intelligence power it has established in Central Asia and the Asia-Pacific is added, it reveals a much closer threat that we will face in the future: Economic Intelligence Wars.
In this context, it is exactly the time to review not only our economic parameters but also our security perceptions.
Distinguished Guests,
At this point, as MÜSİAD, proceeding from the need to develop a new economic algorithm, we have put forward a new model that draws its source from the changing elements of national power and threat perceptions, and we called it MİM. That is, National Economic Architecture.
The measurement of national power is possible only by regarding the economy as the fundamental element of national power.
In the name of our national economy initiative, we proceeded with the following equation: Basic national resources determine national performance. National performance is essential for economic competence. What are these national resources? Of course: mobilizing the national elements in R&D and innovation management; the Management of Venture Funds and the development of a financial system based on participation partnership
Creating Qualified Human Resources
The spreading of financial and national capital resources to the grassroots
The proper protection and utilization of natural resources, and especially water resources, in view of the possible new battlegrounds of the future. Taking as a basis, alongside energy management, the concepts of energy and capital security
And finally, Infrastructure investments that will feed not the financial system but the real economy.
The proper and correct use of these resources carries us to the stage of national performance. That is, the economy becomes a measure of national power. Economic competence is the key factor in today's new world order. To this end we have realized, in the name of an interest-free financial system model, the projects of a cooperative finance system, a building savings system, a venture capital fund, an agricultural investment fund and an industry-based real estate investment fund. In this way we have proved that business can also be done within the boundaries of Islamic economics. In this context, participation banking should devote greater attention to the concepts of mudaraba sukuk and musharaka sukuk finance and should become a partner in our work and our projects. In this way Islamic finance will spread further in the world.
Our fundamental aim here, in the name of measuring national power, is the revival of local advantages and regional economies in line with the new equation I mentioned above, and the transition to a project-focused line of production, trade, partnership and investment.
Because we know that the power of money in a country is determined by that country's power of production.
The aim in this model is not to scale and classify capital, but to create a network economy that is spread to the grassroots and fed by the grassroots. We know one thing very well: movements that find no response at the grassroots or that do not gain broad acceptance across the grassroots are not long-lived.
In order to realize this, at this stage of our Renewal process we have at last brought to life our general structure, which we named MÜSİAD FIELD DEPTH, together with our brands INDEPENDENT VALUES FUND, MÜSİAD INNOVA, MÜSİAD 2023 YEREL, MÜSİAD ACADEMY, MÜSİAD FUTURE, MÜSİAD TIA and MÜSİAD INVEST. MÜSİAD INVEST has in a sense been designed as an investment and participation company based on interest-free financing and crowdfunding. TIA, arising from the breadth of our grassroots base, is the strength of this system in the field.
We defined each of our field brands as raising up a national economic architecture, spread to the grassroots and fed by the grassroots, out of the renewed elements of national power, and we combined them with our broad organizational network.
We will very soon share the broad definitions of these structures with the public in the form of launches with wide participation.
Distinguished Guests,
During the CORONA period, as you know, we withdrew into our homes and, more importantly, into ourselves. God willing, this period will return to us as trust in God and contemplation. God willing, in this period it has offered all of us the opportunity to contemplate through questions such as: “Where are we heading? Are we perhaps setting reality aside and living only within simulations? By passing over today and evaluating many possibilities for the sake of the future as though they were real, are we also losing what we have in hand for a future we may never see? What is it that we have in hand?”
Life, distinguished guests. May my Lord grant us to live it as it deserves so that we do not lose out on life.
As I bring my words to an end here, I thank everyone who has contributed to the realization of this valuable organization of indisputable strategic importance, foremost among them our Honourable Rector. Once more I express before you the pleasure I feel at being here and thank you for your patience. May God protect you. I greet you all with love and respect.