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Islamic Financial Institutions Between Values Inculcation and Profit Maximization

Islamic Financial Institutions Between Values Inculcation and Profit Maximization

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Published by Ezry Fahmy

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Categories:Types, Research
Published by: Ezry Fahmy on May 23, 2010
Copyright:Attribution Non-commercial


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Islamic Financial Institutions: Between ValuesInculcation and Profit Maximization
By : Ezry Fahmy1.0 Capitalism Worldview
Leading an organization relates directly or indirectly with the worldview that drivesthe organization. Capitalism recognizes the need to achieve efficiency, as for the'unlimited' demand that we get, we will always have 'limited' resources. That, we can say'noble'. However, need to be understood that behind the ‘noble’ objectives of thisworldview, they puts profit maximization as main objective above all cost
. A sustainedgrowth due to the profitability gained by the organization however reflects absence and proves how problematic 'classical' capitalism
worldview is hence you have to deal withsuch issues like exploitation of labor, disregard for society, deterioration of theenvironment and so forth.Scientific and technological revolution had also played a big role in shaping industrialrevolution. Protestant ethics also does help. It is being impregnated with enlightenmentvalues that are humanist and secular in nature. Moreover, idea of Darwinism spillover effect unto economics thinking added the chaotic elements into the equation. This issue being highlighted by Prof. Syed Muhammad Naquib Al-Attas in many of his writings,whereby Western civilization is like broken mosaic
! So we must understand how thesemany pieces come and made up into a big picture. Thus we must go back to thefundamental discussion of how we should perceive the correct worldview.If we wanted to conclude by saying sustainable growth and profitability of theorganization is a valid measurement to value the effectiveness on the organizationsinculcating the values, I doubt it. Since the values inculcated by the organizations should
Shutt. H. (2005). The Decline of Capitalism: Can a Self Regulated Profits System Survive?. Malaysia: SIRD.
Syed Muhammad Naquib Al-Attas. (1995). Prolegomena to the Metaphysics of Islam: An Exposition of theFundamental Elements of the Worldview of Islam. Kuala Lumpur: ISTAC.
 be seen from various aspects. Western economists like EF Schumacher, TheodreRoszack, Paul Hawken and so forth have already elucidating many good points about it.But the fact is Western big organizations with big amount of profit still having problemto adjust with the main problem they faced- which is inculcating correct values to their organizations before they end up with failure of ethic-management despite the fact of having good system of management. Some may take this issue as a serious problem whilesome others may still views growth of the organizations as their main objective althoughhave shed people's blood and undermining the environment for mere profit making.
2.0 Important of ethics
Western economics have teaches the important of ethics through ecologicaleconomics. Due to this some organizations which practices 'modern' capitalism includesother 'costs' into consideration, thus look at the socio-economic and environmentalimpact of its operation. But if you go deeper to the root cause, one will find the problemof worldview that can never be solve merely by introducing ecological economics. Itneeds the touch of faith-based system which we could firmly believe as a comprehensivesystem that includes value inculcation. A faith-based system that we believes able toshows the way of simplicity, active and real redistribution of wealth, with that the needsof society can be satisfied.The question that we should not look back is whether in the context of IFIs, valuesinculcation in any of IFIs should be taken seriously since so called Islamic organizationsshall not fall into this worldly trap of making money out of people's livelihood.Effectiveness of values inculcation on organizations should be measure from manyaspects whereby not only emphasizing more on cost effectiveness, efficiency but rather how often do people consider things like equity, accessibility, availability, quality and soforth.Ethical issues in IFIs should be viewed and considered as ‘cost’, or at least it is in theequation, and it yields positive results. Most people think that jump into the field of 
finance or the likes just the matter of getting a hold of a job in the IFIs and make money.Are we go to universities for such objective! Then what about the importance of ethicsand the
 fiqh muamalah
? Of this catastrophic we face now, IFIs responsible to haveilluminated Islamic worldview to be implemented in the fundamental of businessoperations.
3.0 Profit maximization in Islam
Profit maximization indeed recognized in Islam, however it is not the ultimateobjective of how Islamic organizations should be operates. Interesting to note here, TanSri Muhammad Ali Hashim's idea on ‘Jihad Business’, CEO of Johor Corporation withhis idea reflects an interesting idea of how Islamic organizations should be operated. Theidea of jihad in doing business is such a unique idea and reflects that religion should,ideally, lower the standards of the believer, that they should be satisfied with less,differing the idea on how the Western view economics with the worldview of ‘unlimitedwants’ that driven the market with the idea of profit maximization
.Ethics, is a way a validating actions. IFIs are being understood to be govern by
, where actions are categorized into valid, invalid, disliked, recommended, or indifferent. Thus without understand and have full knowledge of religion boundaries(
framework), IFIs can’t easily validate some pretty sick stuff that will later on jeopardize their image as Islamic organization. Example is when validating such productsor services that lead to the economic destruction in the name of market 'justice' andefficiency; this is not how the spirits of IFIs should look like.Value inculcation in IFIs shall be given extra attention from those in leadership positions in IFIs to start to affect the type of change needed to prevent dysfunction in theorganization as laid out by Patrick Lencioni which he sees from the matters of trust,
“Jihad Biisnes” Satu Pendekatan Strategik Ke Arah Pemerkasaan Ekonomi Ummah, Kongres Ekonomi Iislam KeTiga (Ke-3)

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