Photo: Drazen, Adobe Stock

The spectre of inflation: Old debates return

Apart from the war in Ukraine, it is primarily economic concerns that worry many citizens in Europe. After the financial crisis in 2007/8, most of the problems of the financial system remain unsolved. The high national debt of the euro countries leaves the central banks no choice: interest rates cannot rise without risking a collapse of national budgets. In addition, there is the usual strategy of governments to fight each new crisis with huge amounts in the billions.

One does not have to agree with the philosopher Byung-Chul Han, who sees capitalism as dominated by a death drive. But beyond apocalyptic ideas, everyone should be concerned about the private financial situation. In Germany, moreover, the inflation debacle of the 1920s is deeply embedded in the collective memory. It will probably not be that dramatic, but the uncertainty of the population is palpable. Old habits, secure pensions, affordable energy or even the usual annual holiday are all up for grabs.

But things don’t look much better in other regions of the world either. In Turkey, the inflation rate is said to be ten times higher than here. Turkish President Erdogan provokes his critics with a commitment to low interest rates. The Islamic ideal of the prohibition of interest rates, according to some commentators, is even said to be the motive behind the strategy. The government probably wants to defend the country’s economic growth. Meanwhile, people are discussing whether Islamic economic law is part of the solution or part of the problem. However, people tend to overlook the fact that the ban on interest is only part of the Muslim nomos.

Originally, money in Islam had an intrinsic value; dinars and dirhams were nothing more than units of weight of gold or silver. The production of money on the basis of paper money, the banking economy and the creation of money out of nothing were unknown to the Islamic world for a long time, speculative transactions or monopolies were forbidden in principle. In this respect, Islam stands for a moderation, if not a rejection, of capitalism. Of course, the pursuit of profit and private property is not frowned upon among Muslims. In this context, however, the payment of zakat is an important corrective and the symbol of a just economic world.

Whatever one’s position on these issues, the debates about the meaning of Islamic rules in economics are about to be reopened. All over the world, alternative approaches to the existing economic form are being discussed. So far, these schools have hardly been taken into account in the current debates, be it, for example, the Austrian school, which resolutely advocates gold currencies and free choice of means of payment, or the so-called Gesellians, who see the root of all evil above all in interest. In addition, an army of experts is working on the new cryptocurrencies.

One might dismiss these approaches as crackpots. However, classical economics seems to be just as unable to formulate a way out for politics. Therefore, people’s concern is growing, because demonetization will make monetary reform or the introduction of digital money necessary in the long run.

The winners in this perspective will be all those who can secure their assets with real values. In addition, consumers are annoyed by the unbridled power of new monopolies that dominate the global market with their digital offerings. After all, it is the idea of the free market economy that is in danger of losing its meaning.

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