Category: Bakri Musa

by Bakri Musa

Chapter 11: Embracing Free Enterprise

The catalyst that drives, or more accurately the spark that ignites, capitalism is the entrepreneur. She is the individual who sees the opportunity to sell an item or service at a price higher than the cost of making or obtaining it. She sees the need or demand, and then goes about to meeting that need, and in the process makes a profit for herself. Entrepreneurs are, in the words of the MIT economist Lester Thurow, “…the change agents of capitalism.”

It is at this point that the religious types sense an argument against capitalism. Their argument is simply this: capitalism feeds on the individual’s motivation to make a profit, to get rich. My rebuttal is equally simple. The entrepreneur provides a much-needed service or product where none exists before. If that product or service is not needed, then his enterprise will fold soon enough. As for the personal greed motive, it is worthwhile to note that every successful entrepreneur ignites a chain of events that brings benefit to countless others. Ray Kroc who founded McDonalds restaurants with the simple premise that consumers need a reliable place to get consistently tasty and affordable meals, started a chain of process that helps ranchers and butchers (source of meat), potato growers (the chips), and countless youngsters with their first job. This is separate from the great services it provides consumers.

As for the personal greed argument, it is well to remember McDonalds create more Black millionaires in America than the all the professional sports leagues combined. Similarly when Bill Gates created that software operating system, he also provided opportunities for thousands of other software engineers to write applications for his Windows program. Of course Ray Kroc and Bill Gates became fabulously rich, but they were not alone; they brought along countless others. Equally important and bears repeating, they provided much-needed services, products, and most importantly, jobs. The value of the benefits to society they created with their services and inventions far outweigh the wealth and rewards that they get. That is the beauty and genius of free enterprise. Continue reading “Encouraging Entrepreneurialism”

By Bakri Musa
Chapter11: Embracing Free Enterprise

In the decade following independence, the Tunku’s administration adopted a laissez-faire attitude towards the economy. He was committed to free enterprise and capitalism, but he wrongly read the Malaysian economy and marketplace. They were neither open nor free. Powerful forces effectively controlled the economy and marketplace. The first were the large and entrenched foreign-owned corporations (usually British) that essentially corralled the major sectors (the “commanding heights”), from plantations and mining to manufacturing and banking. Through their sheer size and well-established network, these companies ensured that their dominance was never threatened. They neither welcomed nor tolerated new entrants and competitors. The second group was made up of ethnic Chinese and Indian “mom and pop” retailers and sundry merchants. Their enterprises were small family affairs. They too protected their economic turf ferociously. They effectively controlled their domain through their clan organizations, often using extralegal means to enforce their code. The “triad” organizations of secret societies are manifestations of this phenomenon.

Between the ethnic retailers and the major colonial corporations, the economy of Malaysia was essentially “locked up.” They imposed stiff and insurmountable barriers to new entrants. In short, despite the government’s commitment to a free market, the economy was far from being free. The game was rigged. Had there been enterprising and competent Malays, they would have been effectively shut out. Even a super entrepreneur like Ted Turner or someone with a Harvard MBA would have a tough time cracking in an honest way such a closed and rigged system. Continue reading “Malaysian Capitalism”

Malaysia in the Era of Globalization #90
Chapter11: Embracing Free Enterprise

Free Enterprise As An Islamic Tradition
By Bakri Musa

There are those who believe that capitalism implies greed, the very antithesis of our core religious value. Nothing can be further from the truth. This misguided notion led many nations to adopt socialism, with its promised egalitarianism.

The Koran explicitly encourages free market. It commands the faithful to venture into the marketplace and earn a livelihood: “When the prayer is finished, then disperse ye through the land and seek the bounty of Allah.” (Surah Al-Jumu’a, 62:10). Earning a lawful livelihood is a duty second only in importance to that of prayer, preached our prophet (pbuh).

In Islam it is better to give than to receive a wage; that is, better be an employer than employee. A businessperson enjoys an exalted position in Islam. Contemplate this hadith: “In the Day of Judgment, the honest, truthful Muslim merchant will rank with the martyrs of the faith; the trustworthy merchant will sit in the shadow of the throne of God on Judgment Day.”

Ibn Khaldun wrote in his Muqadimmah, “Commerce means the attempt to make a profit by increasing capital, through buying goods at a lower price and selling them at a higher price…This may be realized by storing goods and holding them until the market has fluctuated from low to high price…or by transporting goods to another country where they are more in demand.” Continue reading “Free Enterprise As An Islamic Tradition”

By M. Bakri Musa
Chapter 10: Freedom, Justice, and the Law

Society and Individuals

Society and individual may be the two sides of the same coin; nonetheless our attitude or more importantly the attitude of those in power as to which side to be viewed first, involves more than just a simple toss of the coin. The difference between a totalitarian state versus a civil one is that with the former, the individual serves the state; in a civilized society, the state is there for the citizens. This seminal distinction makes all the difference.

The purported supremacy of Asian values that place a premium on societal goals over the dignity of the individual is in reality at best nothing more than a benign manifestation of authoritarian tendencies. It is no surprise that such societies are prone to militaristic and dictatorial tendencies, as demonstrated by Communist China and the Japan of World War II.
Continue reading “Malaysia in the Era of Globalization #84”

by Bakri Musa
Malaysia in the Era of Globalizat​ion #80
Reform in Islam
Chapter 9: Islam in Malay Life

Trade had been flourishing for centuries in Arabia, immediately before and after the prophet’s time. All that buying and selling, together with the caravan expeditions, could not have taken place without there being a satisfactory financing mechanism. There must had been a system for connecting the owners of money (savers) and the users of cash (investors and traders). Yet despite that flourishing head start and seemingly workable system, Islamic finance later went into decline. It is instructive that the decline in Islamic economics parallels the decline in Islamic civilization.

Today Western financial institutions are preeminent. Western banks and other financial intermediaries did not develop overnight. They have been refined, modified, and strengthened over the centuries. The process continues to this day. Today’s banks are a far cry from what they were a century earlier. The essential ingredient to the success of banks is the faith people have in them. Absent that, not even the strongest institution could survive. All the regulations and innovations in banking serve only one purpose: to strengthen that faith and confidence.

Bank failures and runs on banks were common in America during the depression. Those events are thankfully rare today, in part due to the diligence of the Federal Reserve System and the Federal Depositors Insurance Corporation (FDIC), the regulatory agencies of the federal government, together with strengthened prudential rules on reserves, heightened fiduciary responsibilities, and improved auditing. These refinements have been incremental, each in response to specific problems and crises. Banks still fail today, but thanks to the FDIC, depositors (at least the retail consumers) simply transfer their accounts to another bank without any hitch. The system is by no means perfect, as was painfully demonstrated by the massive Savings and Loans scandal of the 1980s. Continue reading “Islamic Financial Intermediaries”