What is charity today? How do new charitable initiatives recast the classic opposition between economies organized around markets and those organized around gifts? Perhaps one of the most important transformations of recent history is the increasing pervasiveness of market logic in social life. This includes the introduction of cost-benefit analysis to domains, such as education or family relations, previously not conceived of in economic terms. For the past ten years I have sought to diagnose this turn of events by documenting efforts to make Malaysia’s capital, Kuala Lumpur, a transnational hub for Islamic finance.
Fieldwork for this project entailed eight trips to Malaysia over a period of five years, between 2010 and 2015, for stints ranging between three weeks and five months. I was affiliated with the International Center for Education in Islamic Finance (INCEIF), which was established in 2005 by the Central Bank of Malaysia to, in their words to develop the “human capital” for the Islamic finance industry and has become one of the world’s preeminent institutions for professional education and research in Islamic finance. My primary interlocutors were four main groups of experts: sharia scholars (who evaluate financial instruments for their religious permissibility), Islamic economists (who seek to reconcile the theories and models of the academic discipline of economics with Islamic prescriptions), regulators (who seek to foster and administer Islamic financial institutions), and Islamic finance practitioners (who work in banks and other institutions offering Islamic financial products to consumers). During this time a recurring imperative shared by these experts was to, as one put it, turn Kuala Lumpur into the “New York of the Muslim world.”
In this alluring turn of phrase, he referred to efforts led by the Central Bank of Malaysia to create a transnational financial infrastructure that operates in compliance with Islamic prescriptions. A foremost challenge is the Islamic prohibition against interest. Whereas interest-based lending is the primary mechanism for the mobilization of capital in “conventional” financial centers such as Wall Street and the City of London, Islamic finance experts seek to devise instruments that pose investment as the central mechanism for the mobilization of capital. In so doing, they are creating an infrastructure in which commercial expansion is financed through the profit-sharing mechanism of investing, where risk is shared by both a capital provider and an entrepreneur. Islamic finance experts pose these arrangements in contrast to debt-based finance, which they saw as designed to “shift risk” from banks to the institutions and firms to which money is loaned.
As they sought to develop Islamic finance experts expressed anxiety that it would be associated with charity, rather than commerce. Indeed, one of the most striking refrains that I heard was the recurring insistence that Islamic finance was “not charity.” What was at stake in this injunction? Why did the experts whom I encountered feel compelled to consistently raise the specter of charity when describing Islamic finance? The repeated injunctions that Islamic finance is “not charity” suggest how it is framed by the economic logic to which it might otherwise appear opposed. The recurrent effort to distinguish Islamic finance from Islamic charity revealed how Islamic financial forms were shaped by the market logic of conventional finance.
A telling example of this perspective came as I was participating in a workshop on the development of waqf properties in January 2014. The workshop was held at Sasana Kijang, an impressive new glass and steel edifice completed in 2011 and constructed, in part, to house the headquarters of the Islamic Financial Services Board, an international standard-setting organization that develops global standards and guiding principles for Islamic financial institutions. Waqf properties are endowments of private property in which the revenues generated from the property can be deployed for community interests. Dating back to the early history of Islam, waqfs facilitated social cohesion by providing food for the needy or supporting educational initiatives, among other activities. Traditionally viewed as philanthropic endeavors, a representative of the Islamic Development Bank (IsDB) who presented at the workshop elicited a different view of the potential of waqf properties. One recurrent problem with waqf properties is that although landowners have often donated parcels of land, funds to develop them by constructing a building or creating other infrastructure were often not included in the endowment. The IsDB established the Awqaf Properties Investment Fund (APIF) to provide funds to facilitate such development. He described a range of projects undertaken that received APIF funding, including ventures in Sri Lanka, Bangladesh, Macedonia, and the United Kingdom.
Following his presentation, a top official of the Central Bank of Malaysia invoked the IsDB representative’s presentation and concluded that waqfs could be a “channel for the effective mobilization of capital, instead of charity.” The statement suggests how Islamic finance experts sought to recast waqf in market, rather than purely philanthropic, terms. This sentiment was common among Islamic finance experts in Malaysia and was broadly illustrated in other comments that foregrounded balance sheet concerns over social justice, such as the common proclamation that “the motive of Islamic banks is to make profits” rather than philanthropy.
Part of what was at stake in the recurrent insistence that Islamic finance was motivated by profit and not a form of charity was a compulsion to demonstrate that Islamic finance could “compete” in economic terms with its conventional counterpart. Although some Islamic finance experts argued that consumers who chose Islamic instruments would have to pay a premium compared to those who chose the conventional system, many held out hope that Islamic financial services firms could be as economically efficient as their conventional counterparts. They sought to ensure that consumers would not have to face adverse consequences in choosing Islamic instruments as opposed to conventional ones.
These injunctions also aimed to show that Islamic finance complies with market demands of profit-making and cost-benefit calculation. Indeed, Islamic finance experts repeatedly emphasized its commercial objectives. In so doing, they sought to dispel any notion that its religious moorings might connote moral and ethical concerns associated with problems of social justice and economic inequality. Thus, an institution such as waqf, which had been previously conceived according to a philanthropic logic, could be reinterpreted as an instrument for the mobilization of capital.
What kind of economic logic is contained within initiatives such as The Giving Pledge? The insistence that Islamic finance is “not charity” suggests an answer to this question and contains deeper implications for understanding the economic logic of charity today. Conventionally, social scientists have made a tri-partite distinction of economic systems into reciprocal, redistributive, and market forms. So the story goes—“traditional” economies have primarily entailed either gifting, redistribution, or a mix of the two. On the other hand, “modern” economies have been organized according to cash payment and market exchange. However, representing waqfs as a means for “the effective mobilization of capital” illustrates how an institution in which property was traditionally gifted for community benefit is transformed. As a means of mobilizing capital, an institution such as the waqf, previously rationalized according to norms of reciprocity, is subsumed by a new economism. Thus, market logic is extended into the spirit of the gift that previously inhered in the waqf.
In sum, as Filippo Osella and I have recently argued, the division between gift economies and market economies obscures more than it reveals. Although this division has often been assumed in the human sciences, there is increasing evidence that philanthropic gifts are often conceived of, and deployed for, market ends. This is evident in Malaysian efforts to recast waqfs as vehicles for the mobilization of capital. It is also evident in the work of US charitable foundations to promote entrepreneurship, to implement economic calculations in the delivery of services, and in their presumption that poverty is the effect of poorly functioning markets. Recognizing that gifts can be deployed for market ends may better understand how these concepts often shape our understanding of economic formations and, furthermore, how charity and markets are not necessarily opposed to one another, but can, in fact, be mutually imbricated.