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The Prophet Mohammeds surprising life as a businessman _ The Story of Money · Economy & Finance

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  Speaker 1: He had started out in life. He came out of
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  Speaker 1: very good family, but he had absolutely nothing. By the
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  Speaker 1: time he was in his midlife, he was a successful
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  Speaker 1: businessman and could have continued coasting that way. He had
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  Speaker 1: this calling, and becoming a prophet was a terrible challenge
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  Speaker 1: for him.
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  Speaker 2: Today on The Story of Money... Did you know that
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  Speaker 2: one of the world's great religions was founded not by
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  Speaker 2: a saint per se, but a businessman?
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  Speaker 3: Yep.
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  Speaker 4: He was an international trader. He set up a commodities
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  Speaker 4: market and he became quite wealthy along the way. And
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  Speaker 4: if you're wondering who we're talking about, well, the answer
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  Speaker 4: is the Prophet Muhammad.
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  Speaker 2: So to tell this very counterintuitive story, we are joined
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  Speaker 2: by Benedikt Köhler, Benedict, welcome to the show.
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  Speaker 1: Well, thank you for inviting me.
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  Speaker 2: One reason we wanted to talk to you is because
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  Speaker 2: you bring a really unusual perspective to this subject. You know,
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  Speaker 2: you're a fellow at the Institute of Economic Affairs, which
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  Speaker 2: is the famously free market think tank in London. So
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  Speaker 2: presumably you describe yourself not just as a capitalist, but
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  Speaker 2: a libertarian too.
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  Speaker 1: Well, and a reader of the work of Friedrich von Hayek.
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  Speaker 1: And Hayek said governments aren't all that necessary for economies
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  Speaker 1: to prosper. And having read Hayek and looking at early
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  Speaker 1: Islamic history, I just felt the story of early Islam
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  Speaker 1: is the story of Hayek in Arabia.
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  Speaker 4: Yeah, Hayek of Arabia. That sounds like a great film.
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  Speaker 4: I'd watch that. In any case, today we're going to
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  Speaker 4: be talking about the story of Muhammad the capitalist, Muhammad
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  Speaker 4: the merchant, here on the Story of Money with me,
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  Speaker 4: Robin Wigglesworth.
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  Speaker 2: And me, Gillian Tett.
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  Speaker 5: MUSIC What happens next in the story of money? Nuveen
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  Speaker 4: Benedict, you have a fascinating backstory as well. You wrote
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  Speaker 4: a book called Early Islam and the Birth of Capitalism
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  Speaker 4: that argues that we in the West have actually learned
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  Speaker 4: and imported a lot of early capitalist financial ideas from
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  Speaker 4: the Muslim world. But you started out as a financier
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  Speaker 4: in the city of London. So can you tell us
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  Speaker 4: a little bit about how a German banker ended up
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  Speaker 4: writing about Islam and finance?
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  Speaker 1: Well, I was interested in the history of banking. And
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  Speaker 1: I discovered that one of the founders of Deutsche Bank
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  Speaker 1: was also a founder of the German Liberal Party. And
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  Speaker 1: I thought that's an interesting story and wrote his biography.
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  Speaker 1: And after that, somebody tipped me off. By the way,
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  Speaker 1: if you're looking for a topic, did you know Mohammed,
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  Speaker 1: before he was a prophet, he was a merchant? Maybe
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  Speaker 1: there's something in it. And so for the last 15 years,
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  Speaker 1: I've been looking at economics of religion.
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  Speaker 2: Well, that's fascinating. But it's also quite surprising because there's
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  Speaker 2: a Big school of study around the idea that Protestant
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  Speaker 2: Christianity influenced ideas of capitalism. But people don't normally talk
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  Speaker 2: about the Islamic world in association with capitalism, partly because
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  Speaker 2: the religion is famous for banning interest payments, isn't it?
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  Speaker 1: It is famous for banning interest payments, just like Judaism
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  Speaker 1: and Christianity. But what's different about Islam is that it's
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  Speaker 1: a religion that is centered on the personality of its founder,
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  Speaker 1: on Muhammad. And in my view, he was really a
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  Speaker 1: supply-side economist of world historical importance. And that's my theme.
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  Speaker 4: Well, I have to say, Benedict, that I am a
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  Speaker 4: little bit personally sceptical of the thesis that Western capitalism
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  Speaker 4: was influenced directly by Islamic capitalism. But I do love
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  Speaker 4: Islamic finance. It was my first job in financial journalism,
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  Speaker 4: in fact. And it's just a fantastic topic. So I'm
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  Speaker 4: really looking forward to seeing if you can win me
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  Speaker 4: over by the end of today.
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  Speaker 1: Well, I'll make my best effort. Thanks.
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  Speaker 4: So we're going to start our story with a wedding.
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  Speaker 4: The year is 595 CE, Common Era. So the venue
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  Speaker 4: is the Arabian market town of Mecca. And it's bringing
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  Speaker 4: together two figures in that town's business community. So we're
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  Speaker 4: going to start with the groom, the hero of our story,
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  Speaker 4: who is, of course, Muhammad himself. Benedict, can you tell
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  Speaker 4: us a little bit about the young Muhammad who's about
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  Speaker 4: to get married at the time?
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  Speaker 1: Well, Muhammad came from a family that was high level,
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  Speaker 1: high prestige, was an elite family. But his own life
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  Speaker 1: was very, very hard. And he knew from very early
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  Speaker 1: on he'd have to pay his way in life. And
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  Speaker 1: the reason was that his father was a caravan merchant.
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  Speaker 1: But unfortunately, his father died on a caravan mission, didn't
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  Speaker 1: come home in time for his own birth. So he
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  Speaker 1: was an orphan. And he was raised first by his grandfather.
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  Speaker 1: And then when the grandfather died by his uncle, Abu Talib.
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  Speaker 1: And Abu Talib took in hand to give the young
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  Speaker 1: boy a professional background. And he wanted to train him
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  Speaker 1: up to be a caravan merchant, which is what everybody
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  Speaker 1: in the family did.
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  Speaker 2: Well, that's always a good start for anybody. But what
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  Speaker 2: exactly was caravan trading in those days? What did it mean?
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  Speaker 1: Well, caravan trading was the business model of people in Mecca.
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  Speaker 1: Mecca is, and Arabia generally, is not a place where
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  Speaker 1: you'll make money and make a living out of agriculture.
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  Speaker 1: What they had to do was to find a way
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  Speaker 1: to make a living by intermediating trade, taking goods from
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  Speaker 1: one part of the world, from Asia or Arabia, and
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  Speaker 1: taking it to another part of the world. So they
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  Speaker 1: were very, very cosmopolitan and very international-minded. And they knew
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  Speaker 1: they could make a lot of money transporting high value goods.
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  Speaker 1: The higher the value, the better. Stuff like gold or
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  Speaker 1: spices or silk. But they also knew that they were
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  Speaker 1: running tremendous risks, as Mohammed knew from experience, because his
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  Speaker 1: father died on a caravan venture.
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  Speaker 2: And I gather like two to three thousand camels involved
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  Speaker 2: in this going such vast distances at the time, which
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  Speaker 2: is a lot of camels.
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  Speaker 4: Well, yeah, that's a big caravan. That's not like a
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  Speaker 4: small poxy one. That's like a An entourage. A juggernaut,
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  Speaker 4: a caravan juggernaut. What is the collective noun for camels?
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  Speaker 4: I don't know. A grumpiness of camels? I don't know.
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  Speaker 1: And the interesting thing about organizing 2,000 or 3,000 camels
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  Speaker 1: is that you have to organize the people who own
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  Speaker 1: those camels and you have to organize the people who
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  Speaker 1: are going to supply those camels with goods. So there
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  Speaker 1: were lots and lots of people involved in this. It's
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  Speaker 1: what you'd call vertical integration across the whole production of
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  Speaker 1: the economy of Mecca. which went on for several months until,
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  Speaker 1: on a specific date, they'd leave.
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  Speaker 2: And they were carrying things like pearls and incense and
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  Speaker 2: spices and leather and gold and silver. It would have
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  Speaker 2: been very high value and therefore pretty risky crossing by
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  Speaker 2: themselves with all the bandits out and things.
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  Speaker 1: And with all the bandits out and things, they thought,
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  Speaker 1: why should we leave all this trade to the people
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  Speaker 1: coming from Mecca? And this is where Mohammed's family comes in,
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  Speaker 1: because he had a great-grandfather by the name of Hashim.
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  Speaker 1: And Hashim had an idea. He approached lots of the
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  Speaker 1: Bedouins that were guarding the routes that they were traveling
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  Speaker 1: through and told them, listen, instead of you trying to
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  Speaker 1: raid us and us hiring guards to protect us from you,
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  Speaker 1: why don't you just leave us some of your goods?
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  Speaker 1: We'll take them along on our trip and on the
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  Speaker 1: way back, we'll settle. So Hashim created a win-win situation
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  Speaker 1: when before there was a lose-lose situation. That was one
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  Speaker 1: of the ways that they felt that trade is a
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  Speaker 1: good ideal, and it's the business model that brings prosperity
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  Speaker 1: to everybody who's involved. And that business model was called ilaf.
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  Speaker 1: And the ilaf is mentioned by Hashim's great-grandson, Muhammad, who
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  Speaker 1: became a prophet.
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  Speaker 4: Okay, but can you tell us, yeah, I mean, a
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  Speaker 4: bit more about the backdrop here. So this is the
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  Speaker 4: 6th century Arabia, essentially the middle of the desert, What
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  Speaker 4: kind of world were these big, massive caravan trays happening in?
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  Speaker 4: What was the political situation in Arabia at the time?
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  Speaker 1: Well, the astonishing thing about Arabia is that they never
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  Speaker 1: appeared on the radar of the big empires who would
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  Speaker 1: have loved to take them over. But they never managed
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  Speaker 1: to subjugate Arabs. So Arabs, if they had one thing
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  Speaker 1: in common, is that they didn't like foreigners taking over
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  Speaker 1: their lands. But if there's another thing they didn't like,
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  Speaker 1: is any of the Arabs taking over their lands either.
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  Speaker 1: So they were really a Hayekian world. There were private
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  Speaker 1: agreements between all these tribes, and they met for one
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  Speaker 1: reason in regular intervals. They'd go on pilgrimage to Mecca
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  Speaker 1: and worship their individual deities. They were polytheists, and they
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  Speaker 1: were tolerant of any devotion whatsoever. So they met regularly
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  Speaker 1: in Mecca, and Mecca was a safe space for them.
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  Speaker 1: to worship and then also to do trade, but also
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  Speaker 1: to team up and do business and go on caravans.
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  Speaker 1: So religion and cross-border trade went hand in hand. That
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  Speaker 1: was the Meccan business model. But they were never part
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  Speaker 1: of an empire. And that's one of the things the
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  Speaker 1: Arabs were very proud of. Nobody ever managed to take
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  Speaker 1: us over.
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  Speaker 2: So that's really fascinating, that mix between religion and cross-border commerce,
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  Speaker 2: as you say, because that doesn't really fit the regular
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  Speaker 2: view of religion in many other parts of the world.
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  Speaker 3: But.
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  Speaker 2: I'm curious. So that was Muhammad. What about the person
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  Speaker 2: he was marrying at the wedding, Khadija?
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  Speaker 1: Khadija was Muhammad's lucky break in many ways. He would
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  Speaker 1: never have been introduced to Khadija, who was a high
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  Speaker 1: net worth individual of the time.
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  Speaker 4: She was a wealthy woman. at the time.
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  Speaker 1: She was not only very wealthy, she was also a
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  Speaker 1: woman who was very wealthy. So if you didn't go
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  Speaker 1: on caravans yourself, but if you picked the right kind
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  Speaker 1: of caravan manager, you'd invest in their caravan venture and
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  Speaker 1: you'd split the profits on their return. And she made
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  Speaker 1: a substantial fortune that way. So she was wealthy. And
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  Speaker 1: she sponsored Mohammed when he started out in the caravan business.
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  Speaker 1: And eventually they got married. And it was, by all accounts,
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  Speaker 1: a very happy marriage. She died 25 years later. But
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  Speaker 1: he always had very fond memories of Khadija.
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  Speaker 2: And one of the things that's really surprising was she
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  Speaker 2: was actually 15 years older than him, wasn't she? So
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  Speaker 2: she was not only his boss, not only his investor,
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  Speaker 2: but she was also his senior in so many ways.
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  Speaker 1: Jillian, I know she was senior. I don't know how
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  Speaker 1: much older she was, but she was older and she
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  Speaker 1: had children before.
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  Speaker 4: So how usual was it? You said women being active
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  Speaker 4: in business in sixth century Arabia. How common was it?
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  Speaker 4: What kind of situation did they have at the time?
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  Speaker 1: Well, it's so unusual for women to be involved in
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  Speaker 1: business in most countries in most centuries, isn't it? But
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  Speaker 1: it wasn't unusual in Arabia. And I think I already
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  Speaker 1: mentioned his great-grandfather, Hashim. He had a wife, Selma. She
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  Speaker 1: too was an independent trader and she traded on her
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  Speaker 1: own account. So in Arabia back in those days, it
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  Speaker 1: was common for women to have property rights of their own,
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  Speaker 1: but also to be active in business. After Muhammad died,
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  Speaker 1: his widows needed to be provided for and they went
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  Speaker 1: to the caliph who offered them a pension. And the
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  Speaker 1: widows went back to the caliph and said, sorry, but
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  Speaker 1: that's not enough. We'd like more.
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  Speaker 4: In divorces, women back then could get their dowries back even.
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  Speaker 1: Yes, correct.
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  Speaker 2: Extraordinary. So we have Khadija who is essentially financing Muhammad
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  Speaker 2: and is already experienced at that. But when we say
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  Speaker 2: she was financing Muhammad, I mean, how exactly were caravans
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  Speaker 2: in those days with all those camels floating about, how
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  Speaker 2: were they actually financed? Because They didn't have banks in
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  Speaker 2: those days, did they?
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  Speaker 1: No, they didn't. And what you've got to do, Gillian,
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  Speaker 1: if you're going to be a caravan trader and you've
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  Speaker 1: got some wonderful things that you're going to produce and
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  Speaker 1: deliver and take from Mecca to Gaza, well, firstly, you
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  Speaker 1: have to produce those things. And to do those things,
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  Speaker 1: you have some bills to pay in the meantime. And
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  Speaker 1: you have to pay for your raw materials. And you
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  Speaker 1: have to pay for all the time that you're traveling
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  Speaker 1: and for all the time that you're returning. So there's
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  Speaker 1: a long lead time between investing and finding out whether
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  Speaker 1: you've made a profit. And for that, you need somebody
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  Speaker 1: to provide you with upfront capital. And that's what the
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  Speaker 1: very wealthy Meccans knew how to do. So that was
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  Speaker 1: caravan financing, which was, if I could use that term,
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  Speaker 1: it was like venture capital.
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  Speaker 2: But the word they actually used was kirad, wasn't it? Partnership.
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  Speaker 1: Which is one of the things that was copied then
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  Speaker 1: later on in Europe.
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  Speaker 4: But so Islam famously bans the charging of interest. And
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  Speaker 4: as you pointed out earlier, all the Abrahamic religions do
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  Speaker 4: or have at some point. But obviously, it's so much
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  Speaker 4: of a stronger injunction in Islam. Is that tied somehow
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  Speaker 4: to this sort of this venture capital style caravan financing
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  Speaker 4: that was prevalent at the time?
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  Speaker 1: You're right. Absolutely right, Robin, in pointing out it's not
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  Speaker 1: unique for Islam to ban lending at interest because so did.
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  Speaker 1: Israelites, so did Christians. So if you had a money
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  Speaker 1: program inviting Moses, Jesus, and Muhammad and say, talk about
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  Speaker 1: lending at interest, you wouldn't have a discussion going because
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  Speaker 1: they were all on the same page. But in Muhammad's case,
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  Speaker 1: he had not only distaste for lending at interest, but
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  Speaker 1: at people who lend at interest. If you read the Quran,
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  Speaker 1: there are some inflammatory language about individuals who are lending
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  Speaker 1: at interest. But what's different about Islam is that it
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  Speaker 1: promotes a risk-taking and risk-investing. And that means that in Islam,
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  Speaker 1: you have business practices that are not simply tolerated, but
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  Speaker 1: are actually endorsed, promoted, and encouraged by religion. And that's
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  Speaker 1: one of the reasons Islam became a catalyst for capitalist practices.
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  Speaker 4: All right.
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  Speaker 2: So let's go back to our story, which is this
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  Speaker 2: extraordinary wedding between Muhammad and his wife, Khadija. And it's
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  Speaker 2: a good match, a love match. Muhammad remains devoted to
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  Speaker 2: her until her death 25 years later, but it's also
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  Speaker 2: a good commercial match because business goes very well for them.
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  Speaker 4: So I guess it might be a case of happily
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  Speaker 4: ever after, except that 15 years into their marriage, something
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  Speaker 4: happens that changes everything. Muhammad goes off to meditate in
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  Speaker 4: a cave, as people sometimes did back then. You know,
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  Speaker 4: I'd like to do occasion myself. And whilst there, he
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  Speaker 4: had a terrifying experience. but awe-inspiring encounter with a mysterious
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  Speaker 4: and powerful being. And this is the archangel Gabriel, who
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  Speaker 4: reveals the word of God to him. The first verses
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  Speaker 4: of what would eventually become the Quran. And this, this
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  Speaker 4: is the moment that launches Muhammad's new life as a prophet.
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  Speaker 2: Now, we know this is a very important moment for
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  Speaker 2: people of faith, the Islamic faith. But in the podcast,
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  Speaker 2: we're actually going to focus primarily on Muhammad's business career.
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  Speaker 2: So tell us what happens next, Benedict.
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  Speaker 1: Well, what he did was he went straight home and
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  Speaker 1: told Khadija about the fact that he was a prophet,
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  Speaker 1: he had this calling, and he was going to go
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  Speaker 1: ahead with this. And Khadija, and this was a big
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  Speaker 1: moment in her life, she must have known this spells trouble.
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  Speaker 1: And she backed him. She was unquestioning and unflinching in
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  Speaker 1: her support for him. Because what happened when he started
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  Speaker 1: to preach monotheism, Remember, Mecca is a city which lives
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  Speaker 1: on polytheism and lots of people coming there and paying
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  Speaker 1: their respects to their individual deities. The business elite were
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  Speaker 1: not going to like this. And they told him and
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  Speaker 1: they told Khadija, well, listen, you're welcome to have your religion.
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  Speaker 1: We'll just add it to all the other ones that
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  Speaker 1: are here. And Muhammad said, no, we're not. We're going
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  Speaker 1: to eliminate all the other religions that are here because
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  Speaker 1: my religion is the one that's going to replace them.
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  Speaker 1: So it was terrible for their business. So people started
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  Speaker 1: to cut them out, not only Muhammad and Khadija, but
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  Speaker 1: everybody related to them. And things got very, very tense.
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  Speaker 1: So tense, in fact, that Muhammad had to leave the city. Now, Khadija,
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  Speaker 1: during that period, died of natural causes. And just a
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  Speaker 1: few years earlier, he was a man of our town
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  Speaker 1: and had a wonderful life, living comfortably. And becoming a
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  Speaker 1: prophet was a terrible challenge for him, business-wise, as well
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  Speaker 1: as personally. being bereft of Khadija and his guardian uncle,
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  Speaker 1: Abu Talib, died around the same time, and he had
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  Speaker 1: to set out to Medina all on his own.
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  Speaker 4: And this is the year 622, right? The year when
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  Speaker 4: Muhammad is finally exiled from Mecca to Medina, essentially has
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  Speaker 4: to relocate his entire life and his band of followers then.
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  Speaker 1: And he only has a few followers around him, and
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  Speaker 1: they don't have much more money than he does, which
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  Speaker 1: was very, very little.
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  Speaker 4: I mean, could you set up a caravan trading operations
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  Speaker 4: in Medina at all? It was a completely different type
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  Speaker 4: of town at the time.
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  Speaker 1: Well, Robin, this is where the supply side economist comes in.
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  Speaker 1: Because what he did was two things. Actually, I want
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  Speaker 1: to start out telling you about one thing that he
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  Speaker 1: didn't do. He didn't set up a government office and
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  Speaker 1: he didn't build a palace. He never wanted a high
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  Speaker 1: state infrastructure. He set up a mosque. Everybody knows that.
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  Speaker 1: But he set up a second institution. That's the one
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  Speaker 1: that we're interested in right now. he set up another market.
• 17:51
  Speaker 1: And he set up that market. And when he inaugurated it,
• 17:54
  Speaker 1: he said, this is your market and there will be
• 17:57
  Speaker 1: no tax on it. So he had a pretty clear idea.
• 18:00
  Speaker 2: Wow.
• 18:01
  Speaker 1: Clear idea of fiscal incentives because there were four markets
• 18:04
  Speaker 1: in Medina already. So he knew about how to compete
• 18:06
  Speaker 1: with business models.
• 18:08
  Speaker 4: So he undercut by doing zero tax on his market.
• 18:11
  Speaker 4: He undercut the other markets. Right.
• 18:12
  Speaker 1: But the second thing, which I think is really the
• 18:15
  Speaker 1: remarkable achievement and broke with all economic thinking of the time,
• 18:20
  Speaker 1: There was a famine, and when there's a famine, prices
• 18:24
  Speaker 1: for groceries shoot up. And when people go to the
• 18:27
  Speaker 1: government and say, do something, cap prices. And Muhammad, who
• 18:31
  Speaker 1: could be pretty single-minded, as I think has come across
• 18:34
  Speaker 1: by now, on this occasion, he said, well, I'm not
• 18:37
  Speaker 1: going to oblige. And the quote is, prices are in
• 18:41
  Speaker 1: the hand of God. So he said, that's not part
• 18:44
  Speaker 1: of the remit of a prophet. So He introduced price
• 18:48
  Speaker 1: deregulation in the market of Medina. And that is something
• 18:52
  Speaker 1: that no political leader or religious leader until that time
• 18:56
  Speaker 1: had ever done before in the Middle East and probably
• 18:59
  Speaker 1: not anywhere else. So that was the second big thing
• 19:02
  Speaker 1: that he did.
• 19:03
  Speaker 2: But that was slightly ameliorated, wasn't it, by two other things,
• 19:06
  Speaker 2: as I recall it. One was he was very strong
• 19:09
  Speaker 2: in philanthropy and a kind of wealth tax, if you like.
• 19:12
  Speaker 2: I mean, it's not really a wealth tax, but he
• 19:14
  Speaker 2: asked everyone to play zakat, which is 2.5%. tax of
• 19:17
  Speaker 2: finance as safety net. And he also developed the idea
• 19:21
  Speaker 2: of murakhat, which is basically philanthropy being a good thing
• 19:25
  Speaker 2: for the brotherhood to help reduce the gap between rich
• 19:28
  Speaker 2: and poor. I mean, that must have helped, didn't it?
• 19:31
  Speaker 1: Well, Gillian, I'm so glad you mentioned this because this
• 19:34
  Speaker 1: is what people have against capitalism. They say, well, if
• 19:36
  Speaker 1: you're a guy who deregulates prices, if you're a guy
• 19:40
  Speaker 1: who undercuts taxes, what's going to happen to all the
• 19:42
  Speaker 1: people who aren't thriving and succeeding? You know, capitalism is
• 19:46
  Speaker 1: a heartless environment. But in Mohammed's case, it's exactly the same.
• 19:50
  Speaker 1: the opposite. He said there should be provision for poor people,
• 19:54
  Speaker 1: and we're going to impose that as a requirement on
• 19:57
  Speaker 1: everybody who's a Muslim. So it's the provision of welfare,
• 20:01
  Speaker 1: but not by government, not by authorities. You, everybody, yourself
• 20:08
  Speaker 1: should contribute to welfare. That's a very libertarian idea.
• 20:12
  Speaker 2: Absolutely. I mean, of course, the other thing he also
• 20:14
  Speaker 2: said is, as I understand it, you know, really echoing
• 20:17
  Speaker 2: Adam Smith's book, The Theory of Moral Sentiments, he was
• 20:20
  Speaker 2: very keen to create fair trading rules whereby you actually
• 20:24
  Speaker 2: had a common framework of trust around the market. How
• 20:27
  Speaker 2: did that work?
• 20:29
  Speaker 1: Trust was very important. And some of the guidelines that
• 20:31
  Speaker 1: they have in early Islamic legislation are so interesting to
• 20:35
  Speaker 1: read if you have the time. Let's, for example, imagine
• 20:38
  Speaker 1: you're setting up a business and you're setting up managers. Now,
• 20:42
  Speaker 1: Muslims never had a problem setting up and funding a
• 20:45
  Speaker 1: business along with somebody who was, for example, a Christian,
• 20:48
  Speaker 1: no problem whatsoever. But they had a problem hiring somebody
• 20:51
  Speaker 1: who was a Christian. And the reason was, if he's
• 20:54
  Speaker 1: a Christian and he's a manager, he might be buying
• 20:57
  Speaker 1: and selling things that we wouldn't want you to do
• 20:59
  Speaker 1: if you were a Muslim, for example, alcohol or pork.
• 21:04
  Speaker 1: So Islamic business ethics were very, very concerned about supply
• 21:08
  Speaker 1: chains and of making sure they were ethical at every
• 21:11
  Speaker 1: stage of the production process. And that was part of
• 21:14
  Speaker 1: the Islamic legislation.
• 21:17
  Speaker 4: And they also had a market regulator, though, right? I mean,
• 21:20
  Speaker 4: he believed in that prices are set by the hand
• 21:23
  Speaker 4: of God or certain things you have to leave in
• 21:25
  Speaker 4: the hands of the divine. But you do need some
• 21:28
  Speaker 4: humans to make sure that the rules are being adhered to, right?
• 21:32
  Speaker 1: It was the position of the mutazib, the market supervisor.
• 21:35
  Speaker 1: If he didn't like you, that was the end of
• 21:38
  Speaker 1: your career. You wouldn't don't show up tomorrow. We don't
• 21:40
  Speaker 1: like you here. But the mutazib had to make sure
• 21:43
  Speaker 1: that everybody complied with fair trading. And there were rules,
• 21:47
  Speaker 1: for example, against monopolies. So if you're in a town
• 21:51
  Speaker 1: that's expecting caravans to come in, it's not a bad
• 21:54
  Speaker 1: idea to send out your scouts to meet them before
• 21:57
  Speaker 1: they arrive in town, buy up all the goods that
• 21:59
  Speaker 1: you know are in high demand, and corner the market.
• 22:02
  Speaker 1: And that practice was banned. That was regarded as irreligious.
• 22:07
  Speaker 1: So a mutazib had to make sure that everybody trades
• 22:10
  Speaker 1: fairly and there's no insider trading.
• 22:13
  Speaker 4: Yeah, I mean, in the context of the market regulator
• 22:16
  Speaker 4: and the famine, I think I've also come across a
• 22:18
  Speaker 4: different saying, one of the hardest, where he talks about hoarding.
• 22:21
  Speaker 4: I mean, it's fascinating that he obviously talked a lot
• 22:23
  Speaker 4: about economic and financial and commercial issues, but he talked
• 22:26
  Speaker 4: about hoarders. You know, if prices are going up because
• 22:29
  Speaker 4: somebody's hoarding something, well, then they deserve leprosy, which is
• 22:33
  Speaker 4: pretty brutal as well. But it's clearly sending a signal that,
• 22:35
  Speaker 4: you know, we trust in God, but to a certain extent,
• 22:37
  Speaker 4: we need to keep the bad habits of man in
• 22:40
  Speaker 4: check as well, occasionally.
• 22:41
  Speaker 2: Yeah.
• 22:42
  Speaker 1: Well, Robin, and it sometimes went into details that strike
• 22:45
  Speaker 1: one is very odd. I'll just give an example, not
• 22:47
  Speaker 1: of Mohammed, but his son-in-law Ali. So he went to
• 22:51
  Speaker 1: the marketplace and there was a guy who was a blacksmith.
• 22:54
  Speaker 1: He set up his blacksmith shop in the middle of
• 22:56
  Speaker 1: the marketplace and he said, sorry, you've got to take
• 22:58
  Speaker 1: it down. And so the guy said, well, you know,
• 23:01
  Speaker 1: that's a lot of work, transporting this in and out.
• 23:04
  Speaker 1: And he said, no, this is a free market. Every
• 23:07
  Speaker 1: morning people first come, first serve. We don't have anybody coming.
• 23:12
  Speaker 1: expecting they have any kind of privilege here. You start
• 23:15
  Speaker 1: all over every day.
• 23:17
  Speaker 2: You see, another thing I find fascinating about this period
• 23:19
  Speaker 2: is the concept of the ummah, which is still very
• 23:22
  Speaker 2: much prevalent in the modern Muslim world. I did my
• 23:26
  Speaker 2: PhD looking at Islamic studies, and it was a key
• 23:28
  Speaker 2: factor that came up constantly there. And this idea of
• 23:32
  Speaker 2: a common brotherhood. And One reason why that's interesting was
• 23:36
  Speaker 2: before Islam emerged, essentially, Arabia was a fragment into hundreds
• 23:42
  Speaker 2: of different competing tribes, each with their own god. And
• 23:45
  Speaker 2: there wasn't a common sense of identity. But under Islam,
• 23:49
  Speaker 2: everyone became part of an ummah because you had monotheism
• 23:53
  Speaker 2: under a single god. So in some ways, that created
• 23:56
  Speaker 2: more trust in the community than you had before. Do
• 24:00
  Speaker 2: you think that helped pave the way for the rise
• 24:03
  Speaker 2: of this kind of market capitalism as well?
• 24:06
  Speaker 1: I think that's certainly a plausible explanation, because what happened
• 24:09
  Speaker 1: is that you're building trust. And I'm so happy that
• 24:12
  Speaker 1: you mentioned the word building trust, which is so important
• 24:16
  Speaker 1: for market practice, especially, Gillian, if there's no government.
• 24:20
  Speaker 4: So, Benedict, how commercially successful was this market?
• 24:25
  Speaker 1: Well, Medina attracted more and more people. So more and
• 24:28
  Speaker 1: more people get the idea, hmm, this business model is
• 24:31
  Speaker 1: actually a good thing. I think I'd like to know
• 24:33
  Speaker 1: more about it. And unsurprisingly, more and more people then
• 24:37
  Speaker 1: convert to that business model in terms of commerce, but
• 24:41
  Speaker 1: also for the religion that animated it. So that's how
• 24:45
  Speaker 1: it took off across the Middle East. Some of it,
• 24:48
  Speaker 1: and it has to be said, was by means of
• 24:51
  Speaker 1: warfare and of conflict between Medina and Mecca. Mecca is
• 24:55
  Speaker 1: further south to Medina. So if you're in Mecca and
• 24:58
  Speaker 1: your business is taking a caravan to Gaza and in
• 25:01
  Speaker 1: between Gaza and Mecca, there's this city where you have
• 25:05
  Speaker 1: people who you don't like and they don't like you,
• 25:08
  Speaker 1: sooner or later, there's gonna be trouble. And there were
• 25:11
  Speaker 1: raids and eventually Mohammed took over and came back and
• 25:14
  Speaker 1: took possession of all of Mecca. That was part of
• 25:17
  Speaker 1: the reason. They also began to spread Islam northward to Khaibar.
• 25:24
  Speaker 1: That was a settlement north of Medina. And Muhammad gained rents.
• 25:32
  Speaker 1: I think now we call them taxes from the areas
• 25:35
  Speaker 1: that were incorporated into Islam. And through those, he became
• 25:38
  Speaker 1: fantastically rich. So he had the lion's share from raiding parties.
• 25:43
  Speaker 1: And he also had a huge revenue coming in from
• 25:46
  Speaker 1: rents from areas that had become part of the realm
• 25:48
  Speaker 1: of Islam. And according to Leone Caetani, who is a
• 25:52
  Speaker 1: reputable Islamic scholar who has been through all the tax
• 25:55
  Speaker 1: records of the time, he came up with the figure
• 25:57
  Speaker 1: that Muhammad was the highest income Arab of his time.
• 26:02
  Speaker 2: Wow.
• 26:03
  Speaker 1: Living a very, very modest life, it has to be said.
• 26:05
  Speaker 1: He had a high standard of living before he became
• 26:08
  Speaker 1: a prophet. But when he was in Medina, he had
• 26:11
  Speaker 1: a very simple way of life and always made a
• 26:13
  Speaker 1: point of having a simple lifestyle. But never had a
• 26:17
  Speaker 1: problem with those of his companions who liked to live
• 26:20
  Speaker 1: it up.
• 26:21
  Speaker 2: So the picture we're seeing right now is that Islam's
• 26:24
  Speaker 2: on the rise and it will eventually spread throughout the
• 26:27
  Speaker 2: Middle East and along the trade routes going east as
• 26:30
  Speaker 2: far as Indonesia and west to Mediterranean, which is quite remarkable.
• 26:36
  Speaker 2: But as Islam spreads and as this commercial vision spreads too,
• 26:41
  Speaker 2: the interesting question is, is this just correlation? Or is
• 26:45
  Speaker 2: it the model of capitalism that made early Islam such
• 26:48
  Speaker 2: a commercial success and vice versa? And to what degree
• 26:53
  Speaker 2: did this actually come into Europe and the vision of
• 26:56
  Speaker 2: capitalism that emerged subsequently? Does that go back to that
• 27:02
  Speaker 2: market in Medina? So, big questions. We'll be looking at
• 27:06
  Speaker 2: those after the break.
• 27:07
  Speaker 3: Music Investors today are most worried about three key factors,
• 27:18
  Speaker 3: interest rates, the corporate credit cycle, and the impact of
• 27:21
  Speaker 3: artificial intelligence. Artificial intelligence is impacting the jobs market and
• 27:25
  Speaker 3: corporate margins. Interest rates are of concern because people are
• 27:28
  Speaker 3: wondering when will the Fed start to raise or lower
• 27:31
  Speaker 3: interest rates again. And finally, the corporate credit cycle. If
• 27:34
  Speaker 3: the economy is to weaken, what does that mean for
• 27:37
  Speaker 3: the ability of corporate credit to hold up? We are
• 27:40
  Speaker 3: thinking about the next generation and constantly adapting our portfolios
• 27:44
  Speaker 3: to meet their needs.
• 27:52
  Speaker 2: So welcome back. We're discussing something that people don't often
• 27:56
  Speaker 2: talk about in relation to Islam, which is the commercial
• 27:59
  Speaker 2: life of the Prophet Muhammad and the extraordinary free market
• 28:04
  Speaker 2: business model that he established. So Bennett, you think that
• 28:08
  Speaker 2: it was this business model that enabled the rapid expansion
• 28:11
  Speaker 2: of Islam. But you also think that this model eventually
• 28:15
  Speaker 2: found its way into Europe. along with other things like
• 28:19
  Speaker 2: algebra and numbers and things like that, which came from
• 28:21
  Speaker 2: the Arabic world as well, where it eventually sowed the
• 28:24
  Speaker 2: seeds of modern capitalism, which, of course, is entirely different
• 28:27
  Speaker 2: from what people normally presume. So how do you think
• 28:30
  Speaker 2: this has happened exactly?
• 28:31
  Speaker 1: Well, some of it, Gillian, was by way of unintended
• 28:34
  Speaker 1: consequences and things that had something to do with Europeans
• 28:39
  Speaker 1: having some get up and go as well. Now, In Italy,
• 28:42
  Speaker 1: there were some cities, I'll just pick one of them, Venice.
• 28:45
  Speaker 1: But Venice stands for another kind of mercantile operation like Genoa, Pisa,
• 28:50
  Speaker 1: and several others. Now, they were part of the Byzantine Empire.
• 28:55
  Speaker 1: And Venice in the Middle Ages can be compared to
• 28:57
  Speaker 1: what Hong Kong was in the British Empire. This was
• 29:01
  Speaker 1: a self-contained community that had no army, very small one,
• 29:04
  Speaker 1: if at all. But they were traders, and they had
• 29:09
  Speaker 1: an overlord, but that overlord was in Constantinople, very far away.
• 29:13
  Speaker 1: And the Venetians were living very happily, doing business all
• 29:18
  Speaker 1: over the Byzantine Empire, and they had their own trading
• 29:21
  Speaker 1: outposts all along the Levant and in Egypt. Now, eventually,
• 29:26
  Speaker 1: after the Arabs displaced the Byzantines, the Byzantine bureaucracy was
• 29:32
  Speaker 1: pushed out, but the Arabs discovered all of these business
• 29:35
  Speaker 1: people And the business people said, look, if you don't mind,
• 29:39
  Speaker 1: we'd like to stay. And so the Venetians and the
• 29:42
  Speaker 1: other Italians just went on trading in their outposts the
• 29:45
  Speaker 1: way they had done before. They had their own self-contained units.
• 29:49
  Speaker 1: They were called fundakus. They had their own management. They
• 29:52
  Speaker 1: had their own privileged access to Islamic authorities. and they
• 29:56
  Speaker 1: had their own warehouses, and they traded with Islam. So
• 29:59
  Speaker 1: what this did was give Europeans a window into Islamic
• 30:03
  Speaker 1: business practices. And during that time when Venice had its
• 30:09
  Speaker 1: fundacus in the Islamic empire, that was the glory day
• 30:14
  Speaker 1: of the Venetian Republic.
• 30:16
  Speaker 4: So in Venice, they were called commenders, right? These sort
• 30:20
  Speaker 4: of commercial trading ventures, that quite similar to the caravan
• 30:26
  Speaker 4: ventures that we discussed before the break, right?
• 30:28
  Speaker 1: Well, Robin, that's my story. Because what is a commender?
• 30:32
  Speaker 1: A commender is a convoy of boats. So instead of camels,
• 30:36
  Speaker 1: think boats. But what have you got on those boats? Well,
• 30:39
  Speaker 1: you have high value goods and you take them across
• 30:41
  Speaker 1: the water and you sell them and come back and
• 30:43
  Speaker 1: make a lot of money, provided you do come back.
• 30:47
  Speaker 1: It's exactly like the caravan trade. There are big wins,
• 30:50
  Speaker 1: but there are tremendous risks and losses if you don't win.
• 30:54
  Speaker 1: So the business model is pretty much the same. So
• 30:57
  Speaker 1: if you want to equip a ship, you've got to
• 30:59
  Speaker 1: build it and you've got to store all the wares
• 31:02
  Speaker 1: that go on it. And to do that, you need
• 31:04
  Speaker 1: somebody to put money up ahead of time and to
• 31:07
  Speaker 1: wait until you've returned to settle for profits and losses.
• 31:11
  Speaker 1: So a commender just happened to be traveling venture capital
• 31:15
  Speaker 1: across the Mediterranean, across the water, whereas the Kirat was
• 31:19
  Speaker 1: taking venture capital across camels across the sand. But the
• 31:23
  Speaker 1: business model was venture capital in both cases.
• 31:26
  Speaker 4: Yeah, the similarity being you have essentially an investor in
• 31:30
  Speaker 4: a risk sharing venture that in return for putting up
• 31:33
  Speaker 4: the capital, they get a share of the profits from
• 31:36
  Speaker 4: the trading mission or the camel caravan. In your book,
• 31:40
  Speaker 4: you also have actually quite a few other interesting examples
• 31:42
  Speaker 4: of words that European words, we think, but they actually
• 31:46
  Speaker 4: seem to come from Arabic, commercial words. Can you tell
• 31:50
  Speaker 4: us some of those?
• 31:51
  Speaker 1: Well, if you were Venetian, you were doing a lot
• 31:53
  Speaker 1: of business with Arabs and you'd pick up a lot
• 31:56
  Speaker 1: of their vocabulary that you might not be familiar with
• 31:58
  Speaker 1: and say, well, that describes exactly what I'm doing. One
• 32:01
  Speaker 1: such word was traffico, traffic. We take that, it's about
• 32:06
  Speaker 1: cars and traffic jams, but trafficking is really about trading
• 32:09
  Speaker 1: and bartering and taking goods across distance. Another one, if
• 32:14
  Speaker 1: you're in France, you'll see the sign Douane, which refers
• 32:17
  Speaker 1: to taxes on borders. That comes from the Arabic Diwan,
• 32:20
  Speaker 1: which was their accounting office for foreigners coming in. And
• 32:24
  Speaker 1: in France, if you're in a bank, a guarantee could
• 32:26
  Speaker 1: be called an Aval. And that comes from Hawala, from
• 32:30
  Speaker 1: the Arabic ways of guaranteeing long distance payments. But the
• 32:35
  Speaker 1: big word for me, Robin, is the word risk. Now,
• 32:39
  Speaker 1: you think risicum sounds so Latin. It's got to be European.
• 32:45
  Speaker 1: But the funny thing is, it never shows up in
• 32:48
  Speaker 1: any European, Italian, or Latin dictionary until the 1200s. And
• 32:52
  Speaker 1: when it shows up, it's in commercial contracts by Italian traders,
• 32:57
  Speaker 1: where they say this is a commenda ad risicum et fortunam.
• 33:00
  Speaker 1: So the term risk was a new one. So Romans
• 33:04
  Speaker 1: had words for danger or for luck or for fate.
• 33:09
  Speaker 1: But the word risk, the idea of upside and downside,
• 33:13
  Speaker 1: that concept never entered into a European language until Europeans
• 33:18
  Speaker 1: happened to interact with Arabs.
• 33:21
  Speaker 2: Well, there's also a lovely word, which is bitterly ironic today,
• 33:26
  Speaker 2: that's been used a lot by President Donald Trump, which,
• 33:29
  Speaker 2: of course, is tariff, which also came from Arabic as well,
• 33:32
  Speaker 2: didn't it? I mean, you know, bitterly ironic, given what
• 33:35
  Speaker 2: President Trump sometimes says about, you know, wanting to champion
• 33:39
  Speaker 2: European culture, et cetera, et cetera. You know, the very
• 33:42
  Speaker 2: tariff concept comes originally from the Arabic world. But are
• 33:46
  Speaker 2: there other examples aside from tariffs which got imported from
• 33:51
  Speaker 2: the Muslim world in terms of European financial and business practices?
• 33:55
  Speaker 1: Well, one particular, everybody's heard of a famous Italian mathematician
• 34:00
  Speaker 1: by the name of Fibonacci, Leonardo Fibonacci and the Fibonacci series. Well,
• 34:04
  Speaker 1: he grew up in Algeria. in exactly the kind of
• 34:07
  Speaker 1: fundaco that we were mentioning earlier, he wrote his autobiography
• 34:11
  Speaker 1: and said, well, I was trained in mathematics by Arabs.
• 34:14
  Speaker 1: And he then wrote his book about business math. So
• 34:17
  Speaker 1: that's one example of what we picked up, but there's
• 34:20
  Speaker 1: another one that is actually one of my favorite stories
• 34:26
  Speaker 1: is that when in England, the first trusts were created,
• 34:32
  Speaker 1: trusts being a common law invention and an innovation in
• 34:36
  Speaker 1: European law. Well, actually, trusts, where you have a donor,
• 34:41
  Speaker 1: a beneficiary, and a manager who looks after making sure
• 34:45
  Speaker 1: the trust does the way the donor wants it to, well,
• 34:48
  Speaker 1: that model already existed in the Arabic world in the
• 34:51
  Speaker 1: Middle East for several centuries. It was called a waqf,
• 34:53
  Speaker 1: and it was introduced by Muhammad and his companions. So
• 34:57
  Speaker 1: that's another idea that we didn't have until we met Arabs.
• 35:02
  Speaker 1: Now you can say, okay, fine, we didn't meet Arabs
• 35:04
  Speaker 1: until then, but somebody could have figured it out themselves.
• 35:07
  Speaker 1: But the funny thing is, the first trusts were set
• 35:10
  Speaker 1: up by people who were Franciscans and Knights Templar. Now,
• 35:14
  Speaker 1: the Franciscans and the Knights Templar were the very Europeans
• 35:17
  Speaker 1: who had bases in the Middle East. So it's hard
• 35:20
  Speaker 1: to imagine that they got it from anywhere else.
• 35:24
  Speaker 4: No, I mean, they're all fantastic examples. I mean, we
• 35:27
  Speaker 4: should note that not all academics agree that these institutions,
• 35:31
  Speaker 4: these social structures were adopted directly, sort of copied and
• 35:34
  Speaker 4: pasted from the Islamic world. And obviously, similar structures can
• 35:39
  Speaker 4: and often do occur independently in different parts of the
• 35:42
  Speaker 4: world without necessarily being inspired or being influenced from one
• 35:46
  Speaker 4: to the other. The evidence is pretty circumstantial, isn't it?
• 35:52
  Speaker 1: Well, you'll say it's circumstantial, but it's the timing in history.
• 35:56
  Speaker 1: How come you have this critical mass of innovation happening
• 36:00
  Speaker 1: in Europe? And why does it come in exactly those
• 36:03
  Speaker 1: places where we Europeans are interacting with people in Islam?
• 36:07
  Speaker 1: So my storyline is that in the Middle Ages, the
• 36:11
  Speaker 1: Mediterranean was a single market, an interdenominational, multicultural, single market,
• 36:17
  Speaker 1: where ideas traveled from one end to the other, ricocheted
• 36:20
  Speaker 1: across the Mediterranean, and people picked them up. But it
• 36:23
  Speaker 1: never would have happened if there hadn't been people in
• 36:27
  Speaker 1: Mecca who said, we have this business model, and let's
• 36:31
  Speaker 1: see how far we can run with it.
• 36:33
  Speaker 2: And one of the reasons I love this story, apart
• 36:35
  Speaker 2: from being so inspirational, is that my own PhD work
• 36:39
  Speaker 2: was based on the Silk Roads, which was all about
• 36:42
  Speaker 2: different cultures colliding and learning from each other, But as
• 36:46
  Speaker 2: an anthropologist, I also passionately believe that anyone's vision of
• 36:49
  Speaker 2: cultures existing like Tupperware boxes, where you can seal them
• 36:54
  Speaker 2: and they're static and you can stack them on top
• 36:56
  Speaker 2: of each other in a hierarchy of value and inevitably
• 36:59
  Speaker 2: put your own culture at the top, is entirely wrong.
• 37:03
  Speaker 2: Culture is more like a slow-moving river with very muddy
• 37:07
  Speaker 2: banks that new streams keep flowing into And the waters
• 37:11
  Speaker 2: keep moving and keep redefining themselves. And what you're talking
• 37:14
  Speaker 2: about is really a story of commerce that's on that
• 37:17
  Speaker 2: model where people were borrowing ideas from each other and
• 37:20
  Speaker 2: often very hard to work out where they came from
• 37:23
  Speaker 2: originally because no one had a copyright, say, on the
• 37:25
  Speaker 2: word risk. So one of the things that's also very
• 37:29
  Speaker 2: ironic about what you're telling us is that not only
• 37:31
  Speaker 2: does it change or challenge our vision of how cultures
• 37:36
  Speaker 2: operate throughout history, But it should also make us rethink
• 37:40
  Speaker 2: some of our ideas about Islam and capitalism, because very
• 37:43
  Speaker 2: often the European and let's say Christian world, the American world,
• 37:48
  Speaker 2: tends to think of the Islamic world as being economically
• 37:50
  Speaker 2: very sclerotic. And that's because by the 19th century, the
• 37:53
  Speaker 2: Ottoman Empire was being dubbed the sick man of Europe.
• 37:57
  Speaker 2: And all the brilliant science we'd seen in earlier centuries
• 38:01
  Speaker 2: had somewhat fizzled out. Meanwhile, Europe was being seen as
• 38:04
  Speaker 2: a birthplace of capitalism and economic dynamism. you know, all
• 38:08
  Speaker 2: that Adam Smith and things. Why do you think that is?
• 38:11
  Speaker 1: Well, the Islamic business model came a cropper in the
• 38:17
  Speaker 1: late 1490s. Within the space of 10 years, two things
• 38:21
  Speaker 1: happened that put an end to the Islamic golden era.
• 38:25
  Speaker 1: The first was the navigator Vasco da Gama. He sailed
• 38:28
  Speaker 1: from Portugal around Africa, made it to India. From that
• 38:33
  Speaker 1: moment on, you had a sea lane and a sea
• 38:35
  Speaker 1: traffic going to India. You no longer... needed to travel
• 38:39
  Speaker 1: across the lands of Islam. So that was competitor number one.
• 38:44
  Speaker 1: But competitor number two came through Christopher Columbus. He sailed
• 38:49
  Speaker 1: across the Atlantic and discovered America. So all of a
• 38:52
  Speaker 1: sudden there were business opportunities in an entirely new region.
• 38:56
  Speaker 1: And with that, the business model that had sustained the
• 39:00
  Speaker 1: Islamic prosperity for so many centuries was obsolete. Now, Gillian,
• 39:05
  Speaker 1: I appreciate completely what you're saying, that people said the
• 39:08
  Speaker 1: fizz went out of Islam, and that is true. But
• 39:12
  Speaker 1: the business model was wrecked, and there was nothing that
• 39:15
  Speaker 1: was going to bring it back. And that had nothing
• 39:18
  Speaker 1: to do with Islam. They could have had any other religion,
• 39:20
  Speaker 1: and their business model would have been wrecked. And I'll
• 39:23
  Speaker 1: give you an example for that. Think of Venice. Venice
• 39:26
  Speaker 1: was a prospering polity until around the time... that Mr.
• 39:31
  Speaker 1: Vasco da Gama and Mr. Columbus found sea lanes into
• 39:34
  Speaker 1: new destinations. Venice never came back, and nor did the
• 39:38
  Speaker 1: entire eastern Mediterranean. So you're right. The fizz went out
• 39:42
  Speaker 1: of the eastern Mediterranean from around 1500, but That was
• 39:46
  Speaker 1: irrespective of whether or not somebody was Muslim, Christian, or Orthodox.
• 39:50
  Speaker 2: And by the way, the fizz went out of the
• 39:52
  Speaker 2: parts of the world where I once studied for my PhD,
• 39:54
  Speaker 2: which is much of Central Asia subsequently, because to use
• 39:57
  Speaker 2: modern parlance, the whole Silk Road got disrupted or disintermediated.
• 40:03
  Speaker 2: But I mean, Robin, you expressed some doubts earlier about
• 40:05
  Speaker 2: Benedict's thesis that so many of the ideas that are
• 40:08
  Speaker 2: the bedrock of modern European capitalism originally came from the
• 40:13
  Speaker 2: Islamic world. So I'm curious, has he changed your mind?
• 40:17
  Speaker 4: Well, I mean, my first job in journalism was in Islamic,
• 40:21
  Speaker 4: covering Islamic finance, and I still find it absolutely fascinating.
• 40:25
  Speaker 4: I completely agree. And what's so unique with the Prophet
• 40:29
  Speaker 4: Muhammad is the only really major religious figure who actually,
• 40:34
  Speaker 4: you know, was a businessman, but also led a community,
• 40:37
  Speaker 4: So he wrote and talked a lot more about economics
• 40:40
  Speaker 4: and commerce than anybody else, really, of any major religious significance.
• 40:45
  Speaker 4: So there's so much interesting nuance and context in his thinking.
• 40:49
  Speaker 4: So I still think this is fascinating. I still talk
• 40:53
  Speaker 4: about Islamic reinsurance and Islamic bonds and things like that.
• 40:57
  Speaker 4: But I'm skeptical of just to what extent that was
• 41:01
  Speaker 4: kind of directly influenced the West. I definitely agree with
• 41:04
  Speaker 4: the whole idea that these ideas are percolating. But, you know,
• 41:08
  Speaker 4: the Romans had something like the fundux and the Venetian commanders,
• 41:13
  Speaker 4: these risk-sharing organizations, sort of proto-companies almost. So the Romans
• 41:21
  Speaker 4: had something called finis nauticum. They were actually more debt-based.
• 41:25
  Speaker 4: They were more lending. You lent to commercial ventures rather
• 41:29
  Speaker 4: than being sort of equity-based, where you invested money in
• 41:31
  Speaker 4: them with sharing capital. But they were quite similar. Romo's
• 41:35
  Speaker 4: also had something kind of he squinted that looked a
• 41:39
  Speaker 4: bit like a public company called Societatas Publicanorum. So I
• 41:45
  Speaker 4: just think humans are actually incredibly inventive. And some of
• 41:49
  Speaker 4: these ideas, we've kind of stumbled our way to independently
• 41:53
  Speaker 4: while still obviously being inspired and taking influences from everywhere.
• 41:59
  Speaker 4: I think the Venetians would have had a commender, even
• 42:02
  Speaker 4: if they'd never been in direct contact with the Muslims.
• 42:05
  Speaker 1: There's a lot in what you say, Robin, and I
• 42:07
  Speaker 1: maintain my point. I'm sticking to my guns on this.
• 42:10
  Speaker 1: What's different about the case of Islam is That you
• 42:13
  Speaker 1: have all these building blocks in other cultures, in other times,
• 42:17
  Speaker 1: in other religions, in other societies. But what you don't
• 42:20
  Speaker 1: get is the concentration. What you don't get of the
• 42:23
  Speaker 1: whole being more than the sum of its parts. And
• 42:26
  Speaker 1: what you don't get is the explicit backing of all
• 42:30
  Speaker 1: of these practices, which is contained in the work of Muhammad.
• 42:34
  Speaker 4: That's true.
• 42:35
  Speaker 2: I guess you can sit there and argue about whether
• 42:36
  Speaker 2: it's correlation or causation to use that financing framework that
• 42:41
  Speaker 2: people often talk about. For me personally, one of the
• 42:43
  Speaker 2: most important elements that comes out of this is the
• 42:46
  Speaker 2: emphasis on equity financing, not debt financing. And frankly, I
• 42:50
  Speaker 2: happen to think there's a lot of merit in championing
• 42:53
  Speaker 2: this today as we have a global system drowning in
• 42:56
  Speaker 2: excess debt and leverage in every sense.
• 42:58
  Speaker 4: No, I agree completely with that. I think that's the
• 43:01
  Speaker 4: Islamic financial sort of foundation stone that should be about
• 43:05
  Speaker 4: true risk sharing and more equity than debt, I think
• 43:08
  Speaker 4: is incredibly compelling. I don't think we can return to that,
• 43:12
  Speaker 4: but I agree that it would be better if we
• 43:15
  Speaker 4: actually maybe imported a bit of Islamic financial thinking into
• 43:18
  Speaker 4: the Western world on that regard.
• 43:20
  Speaker 2: I guess one of the things I'm so fascinated by
• 43:22
  Speaker 2: your thesis, Benedict, one of the reasons is that you know,
• 43:25
  Speaker 2: we live in a world where we have so much
• 43:27
  Speaker 2: prejudice swelling towards different ethnic groups and religions and things.
• 43:32
  Speaker 2: And so many people will be very surprised to hear
• 43:35
  Speaker 2: a very different vision of Islam and finance from what
• 43:39
  Speaker 2: the popular media tropes often are. And I'm just curious,
• 43:44
  Speaker 2: how has your ideas and your thesis been received in
• 43:48
  Speaker 2: the Muslim world, given that you are a paid up
• 43:52
  Speaker 2: libertarian and capitalist. And you're not actually a Muslim yourself.
• 43:56
  Speaker 1: I was nervous about that. And I've been amazed at
• 43:59
  Speaker 1: the response. But my book has been translated first into Turkish,
• 44:04
  Speaker 1: then into Arabic, then into Farsi. And I've been giving
• 44:08
  Speaker 1: talks from Morocco to Malaysia and several countries in between.
• 44:12
  Speaker 1: And what's amazing is the hospitality and the courtesy that's
• 44:17
  Speaker 1: been extended to me. And I can only salute my
• 44:20
  Speaker 1: translators because I was nervous for them. In particular, somebody
• 44:24
  Speaker 1: who translates my book into Farsi. Because getting any book
• 44:29
  Speaker 1: published in Iran, you've got to jump a number of hurdles.
• 44:32
  Speaker 1: And if you want to publish a book in Iran
• 44:34
  Speaker 1: about Muhammad, you probably have to jump even more hurdles.
• 44:38
  Speaker 1: And I reckon if you want to publish a book
• 44:40
  Speaker 1: about Muhammad written by somebody who's a Christian, I reckon
• 44:44
  Speaker 1: there are even extra hurdles you've got to jump. And
• 44:47
  Speaker 1: to jump all those hurdles, get it through and have
• 44:49
  Speaker 1: a book that's in its sixth print run, I say
• 44:52
  Speaker 1: hats off to the translator and the publisher who have
• 44:55
  Speaker 1: the guts to do that. And I'm very appreciative of
• 44:59
  Speaker 1: what they did.
• 45:00
  Speaker 2: Absolutely. And I guess one of the things that's really
• 45:02
  Speaker 2: heartwarming about the story and fascinating is it really does
• 45:05
  Speaker 2: show the power of mutual respect for different cultures, the
• 45:09
  Speaker 2: fact we can all learn from each other, and the
• 45:12
  Speaker 2: fact that no one culture or you know, civilization has
• 45:15
  Speaker 2: a monopoly on good ideas.
• 45:17
  Speaker 4: True that, as the kids say. But before, guys, before
• 45:20
  Speaker 4: we end, I'd love to maybe return to the prophet's story,
• 45:25
  Speaker 4: the hero of our story, even though we're going to
• 45:27
  Speaker 4: stick to the non-spiritual parts of it, because it is
• 45:30
  Speaker 4: a compelling, incredible story. He began life as an orphan.
• 45:35
  Speaker 4: He founded this hugely successful market economy in He conquered
• 45:39
  Speaker 4: his old rivals in Mecca. And he was incredibly wealthy,
• 45:43
  Speaker 4: but he lived incredibly frugally, right? Benedict, can you tell
• 45:48
  Speaker 4: us a little bit about how his life went towards
• 45:51
  Speaker 4: the end? How did it all play out?
• 45:53
  Speaker 1: How did it play out? Well, Robin, you just mentioned
• 45:56
  Speaker 1: you've got three kids. I tell you one thing. If
• 45:58
  Speaker 1: one of them ever tells you, Dad, I think I've
• 46:00
  Speaker 1: got the calling to be a prophet, talk him out
• 46:03
  Speaker 1: of it. Because it's a very tough life. And he was,
• 46:07
  Speaker 1: by the end of his life, he felt incredible sadness.
• 46:10
  Speaker 1: There was nothing he would have liked better than to
• 46:13
  Speaker 1: have a son. He did, but that little boy died
• 46:16
  Speaker 1: when I was a toddler. But he had started out
• 46:19
  Speaker 1: in life. He came out of a very good family,
• 46:22
  Speaker 1: but he had absolutely nothing. By the time he was
• 46:25
  Speaker 1: 40 years old, in his midlife, he was a successful
• 46:28
  Speaker 1: businessman and could have gone on, continued coasting that way.
• 46:32
  Speaker 1: Chose a new career, started with nothing, started all over.
• 46:36
  Speaker 1: turn it into something unimaginably bigger than anything could have
• 46:40
  Speaker 1: been imagined, had an enormously high income, but didn't care
• 46:45
  Speaker 1: for flaunting his wealth or enjoying his wealth, had a modest,
• 46:49
  Speaker 1: humble lifestyle, and was never somebody who put on airs.
• 46:53
  Speaker 1: So he didn't believe in big government. He really believed
• 46:56
  Speaker 1: that he was very egalitarian in that way. Not, however,
• 46:59
  Speaker 1: as regards owning and making money. So he had lots
• 47:02
  Speaker 1: of friends who were very, very, very wealthy. they liked
• 47:05
  Speaker 1: the trappings of wealth and he never stopped it. He said,
• 47:08
  Speaker 1: if Allah lets you have lots of money, good for you,
• 47:11
  Speaker 1: enjoy yourself. But for himself, he never wanted it.
• 47:14
  Speaker 2: That's fascinating. Well, I must say, many of today's tech
• 47:18
  Speaker 2: titans would applaud the point about big government. They might
• 47:22
  Speaker 2: applaud the point about accepting the merit of accumulating money
• 47:27
  Speaker 2: for your own hard work. They probably wouldn't quite agree
• 47:30
  Speaker 2: about the fact that you shouldn't flaunt it if you
• 47:32
  Speaker 2: have it. But Anyway, that's a contentious point. I know
• 47:37
  Speaker 2: many religions have things to say about that. And we'll
• 47:39
  Speaker 2: be coming back in future episodes to talk about how
• 47:42
  Speaker 2: other religions have intersected with the world of finance and
• 47:45
  Speaker 2: money in some very surprising ways. We'll also be talking
• 47:48
  Speaker 2: more about Islamic finance and how its impact in the
• 47:51
  Speaker 2: world today and what we can frankly all learn from it,
• 47:54
  Speaker 2: whether we are Muslim or not. But those are future episodes.
• 47:59
  Speaker 2: So I'll just say, Thank you so much, Benedict, for
• 48:02
  Speaker 2: joining us today.
• 48:03
  Speaker 1: Well, thank you for inviting me.
• 48:05
  Speaker 2: And that's it from the Story of Money this week.
• 48:07
  Speaker 2: I'm Gillian Tett.
• 48:08
  Speaker 4: I'm Robin Wigglesworth. We'll see you all here next week.
• 48:18
  Speaker 2: Hi, it's Gillian here, and I hope you enjoyed today's
• 48:22
  Speaker 2: episode of the Story of Money. And if you want
• 48:25
  Speaker 2: to hear more, I've got some good news for you.
• 48:27
  Speaker 2: If you're in London in September, come along and listen
• 48:30
  Speaker 2: to Robin and me at the FT Weekend Festival, recording
• 48:35
  Speaker 2: an episode about what some of the greatest literary figures
• 48:37
  Speaker 2: of history made of the world of finance in conversation
• 48:41
  Speaker 2: with the author, David McWilliams. You can buy a ticket
• 48:45
  Speaker 2: with a discount. Just use the code FT podcast, and
• 48:51
  Speaker 2: you can also find all the details about this in
• 48:54
  Speaker 2: the show notes. or at ft.com slash festival. It's happening
• 48:59
  Speaker 2: at the FT Weekend Festival on Saturday, the 5th of
• 49:01
  Speaker 2: September at Kenwood House in London.
• 49:04
  Speaker 5: So hope to see you there.