Capitalism with Islamic Characteristic? An Overview from Newly Industrialized Islam Majority States (Malaysia and Turkey)


Illustration of Malaysia. Photo:

After the end of the Cold War, United States appear as undisputed global superpower and then, political and economic way of liberal democracy and economic neoliberalism become universal norms and the world towards uniformed singular identity, this hypothesis based on notable Francis Fukuyama’s book with titled “The End of History and The Last Man”. However, four years later Samuel Huntington criticized Fukuyama’s thesis with His lecturer “The Clash of Civilizations and The Remaking of World Order” that argued future conflicts would not betweenpolitical and economic values, but rather ancient rivalry and civilization between Western and the challengers such as Sinic and Islamic caused by the major shift of economic and military power on the both of them.

Despite being criticized by various scholars such as Edward Said and Amartya Sen, the Huntington’s hypothesis on cultural rivalry become into real, as We witnessed the greater growth of economic development particularly in various Islam majority states such as Turkey and Malaysia, because of their acceptance on market based economy during authoritarian regime become industrialized and booming price of oil in some peninsular Arab states such Saudi Arabia, Qatar, and United Arab Emirates (UAE). Apart from oil booming states, Turkey and Malaysia have unique experience on managed growth and led into the rise of Muslim middle class embracing Islamic way of ethic on capitalism, which encouraged by regime in Malaysia during Mahathir Mohammad tenured as Prime Minister (Jugeo, 2018). and as response of secular businessmen and industrialist clientelism with authoritarian secular regime in Turkey, and later become major driven of Islamist-populism victory under AKP (Justice and Development Party) in last four elections simultaneously (Yilmaz & Bashirov, 2018).

The impressive economic growth of Turkey and Malaysia breaking narrative myth that Islam and capitalism is incompatible by early scholars such as Max Weber perceived Islam as fatalistic, warrior minded, and static because of Islam teaching on various activities such as prohibiting pork, gambling, prostitution, and alcoholism which lead to direct economic consequences and regarded as regressive culture, In contrast of classic liberalism of economic teaching encourages individual person unleash their potential as means to prosperity, the norms and values will follow as people getting prosper by their individual efforts. Other than above, Islam regarded conventional financial and banking practice paying of interest as Haram, and prefers profit and loss sharing or risk sharing, which compliance with Sharia. This practice popular among pious small and medium business owners united under Independent Industrialist and Businessmen Association (MUSIAD) in Turkey, later this practice broadened and commercialized as an alternative financial mechanism alongside with conventional market finance in Malaysia as ambitious project to set up Malaysia as leader of Islamic financial market.

This article will show how Islam and capitalism converged and reconstructed capitalism which challenging globalization of capitalism by the west which reinforced through dualism perspective between market and culture as two distinct entity dominated or hostile, and consolidating West as the space of market, rationality, egalitarian, science and technology while the rest as space irrationality, traditions, feudalism, myth and superstition. Then, discussing the practice of Islam as ethics of capitalism pursued by different approaches in two countries, I argued that Malaysia during Mahathir tenure as Prime Minister infused Islamic values as ethics of development, mixed with neoliberal reforms such as privatization, while bottom to the top approach adopted in Turkey. Later, I will explore the possibilities of these success stories from two countries become a role model for the Islamic world who still seeking for values and norms to answer neoliberal globalization and catching up the West.

Critics of Market Globalization and The Essence of Islamic Ethics on Capitalism

To understand what is Islamic Ethics on Capitalism we need to figure out what makes Islam resistance to current form of capitalism, capitalism can’t exist without market that resembled from various exchange of goods and services, these practices going simultaneously and requires all involving actor to conduct it rationally and follow what demands on market. Market demands ignored ethics, culture, and norm differences and replacing trust, solidarity, and cultures among indigenous group with rationality, money, and commodification; this conforms with the hypothesis of Benjamin Barber on his book Jihad vs Mcworld that argues the rising of indigenous resistance towards global capital forces which transforming world into universal single identity through globalization. According to Emin B. Adas, the rise of Islamic capitalism is a phenomenon of cultural criticism of universal market model or culturalism. Culturalism of economy treat culture as fixed and unified forces to determining the economic and social processes. Culturalism of economy based on Paul DiMaggio arguments to testing the effect of cultures on economy requires a individual or group with a kind of specific culture behave differently and making cultures are not necessarily reflect stuctural positions of material influences (Adas, 2006).

Here in context of Islamic ethics of capitalism or Islamic neoliberalism, Islamic values positioned as cultural determinants of economic growth and modernity and as alternative way of modernity than the West. The variations of economic system with islamic values consists of Islamic market-mechanism, Islamic plan mechanism, and Islamic plan-then-market mechanism. Islamic market-mechanism defines as an economic system which emphasized on free market mechanism and unleashing individual potential and ambitions which believed given by God and not breaking transcedental rule or breaking prohibited acts based from Quran, such as paying interest or Riba. Otherwise, individual person in Islamic capitalism should responsible to provide basic necessities to the poor through zakat as a requirement of religious duty, this is making distinction with conventional capitalism ethics based on Weber by both of them acknowledge that inequalities are inevitable outcomes of free market system, however Islamic capitalism still concerning on rights for basic necessities through zakat as religious duty which neglected by Weber’s ethics on capitalism (Adas, 2006).

The Practice of Islamic ethics of Capitalism in Turkey and Malaysia: Same Goal, Different Approaches

In Turkey, Islamism gain prominence after neoliberalism reform imposed in the early 1980s after three decades of developmentalist state building project since 1950s benefiting secular minded businessmen based in urban coastal area under umbrella Turkish Businessmen and Industrialist Association (TUSIAD) and intertwined with state secularization project under Kemalism. During developmentalism period, these businessmen supported by state through patronage in bureaucracy and protected by state policy of domestic market in export-based industries and making economic sphere less competitive (Varol, 2018). After neoliberal reform, these businessmen need to compete with emerging smaller businessmen which comes from heartland Anatolia with socially conservative combined strict embedded Islamic values minded under newly founded Independent Businessmen and Industrialist Association (MUSIAD) in 1990 (Atasoy, 2008).

MUSIAD members consists of successful small and medium business owners originated from heartland Anatolia or Anatolian Tigers. These owners involved in business or industries that labor intensive based such as textile, leathers, construction, building materials, and food manufacturing. Although MUSIAD economic output contributed 10 percent of Turkish GNP, their strength lies on export competitiveness through maintained economic relations with Turkic and Muslim majority states. MUSIAD affiliated businesses appealing and supported by urban poor due to their simple approach to recruiting workers that making impact in reducing unemployment although employed in informal businesses. The approach through network of solidarity urban poor under longstanding norms such as durust (thrust) and durustluk (trustworthiness) with kin, neighbors, hemseri (person in same area), es-dost (friend), tanidik (contacts), and, torpil (influential contacts) (Atasoy, 2008).

MUSIAD also supported by Hizmet or Gullen Movement to run charities work and religious activities to promote civic engagement of global economy with Islamic ways. In religious activity, Hizmet movement involved in missionary activities or Dakwah through small group religiousmentoring without formalized membership to creating pious Islamic individual not only in symbolic or ritual dimensions, but also in ethics in behaviour and reinforced self-discipline resulting in individual growth and economic prosperity (Atasoy, 2008; Dreher, 2015). While in charity, Hizmet movement gathering funds to provide scholarship for disadvantaged and poor people to get better education. In additional, Hizmet movement also founded various schools, university preparatory centers, and universities. The fund collected by Hizmet through zakat or donations from various sympathetic businessmen and profit from Hizmet owned ventures (Dreher, 2015).

While in Malaysia, Islam has intertwined with Malay identity combined with formal incorporation of Islam as official religion which enshrined on Constitution and as one of three aspects of Malayness. The federal constitution also treated special provision of Malays as indigenous group and Malay sultans, these making nation building project of Malaysia often criticized alienating other ethnic groups such as Chinese and Indian which comprising the rest of all Malaysia population (Hamid, 2018). After independence, there were racial riots between Malay and Chinese groups namely 13 May 1969 incident become turning point of Malaysian politics through implementation of New Economic Policy (NEP) or economic affirmative policy two years after incident for bumiputra or indigenous people (Malay) due to the incident perceivedly caused by economicdisparities between Malay and Chinese.

In 1981, Mahathir ascended to power as Prime Minister of Malaysia coincided with the rise of Islamism in politics after the Islamic Revolution in Iran 1979, the effect of revolution to push more Islamic values in public sphere and government spill overed to other Islam majority states like Malaysia. Inspired like in Iran, PAS (Islamic Party of Malaysia) rise as Islamist political party dominating state of Kelantan and Trengganu. Fearing of PAS domination into federal politics, Mahathir took action with bringing ruling party UMNO and government into more Islamic agenda such as more involvement in Organization of Islamic Conference (OIC), founding International Islamic University (IIUM), and promoting Islamic teaching that disciplining individual, wealth generate, self-sufficient and in line with led with state led development through Council for Islamic affairs and state Religious Department, in addition above, government start to imposed Islamic civilization studies in tertiary level and established Islamic Teachers Training College in Petaling Jaya (Mauzy & Milne, 1983). After Mahathir rule, government continues to making Malaysia as Islamic Financial Hub until now (Rudnyckyj, 2013).

To summing all above, Malaysia and Turkey appeared as two Islamic majority states that successfully transformed into well developing states and benefited through neoliberal reforms to making their economy connected into global market without sacrificing Islamic values embedded their people. Despite differences on approach, both of these countries succeeded in reforming Islamic values as means toward prosperity and personal growth in ethical ways or as long not breaking transcendental aspects of Islamic values based on Quran and Hadith. Islamic ethics of Capitalism in Turkey practiced by emerging businessmen from rural area and expanded by Hizmet or Gulen Movement through charities and informal membership religious learning mentorship. While in Malaysia which socio-political landscape favoring single ethnic group and Islam inseparable of state building project, government roles contribute significantly. The success of two countries do not close any possibility to become role model for current developed Islamic majority states which mostly in Arab peninsular still heavily relies on mineral resources and seeking for sustainable sectors for economic development and then, most of Islamic majority states which still under developing or least developed status.


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Adyuta Banurasmi Balapradhana is an International Relations student Universitas Pembangunan Nasional “Veteran” Yogyakarta and the 1st place winner of 2021 Jakarta Youth Summit Essay Competition. He can be found on Instagram with the username @banurasmi_

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