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Wednesday, March 6, 2013

Efficiency vs socialization

A Muslim intelellectual once said that "It is easy for Muslim society to have many associations. A group of people who have resentments to their management might quit the organization and create their own assosciation. When this newly established association develops and  spreads over to the people, then a  group within the association who starts to have gruelties against its management will do the same thing as the founder did to their first organization. And this process will continue without anyone knowing until when."


In term of democracy it might be considered as an expression of "freedom of speech" principle and "freedom of association" foundation. But from political perspective it is not as beautiful as one thinks about. The more associations a society has, especially when they are working in the same field and direction, then the result will be a sort of competition and zero-sum game fight. Never dream any cooperation will come up from this situation. While the size of the pie is still the same as before, one party will try to get more than others.  Decision will be more difficult to achieve since every party has the right to have voice and to vote based on their own interest. 

The same line of thinking applies in the field of economics and banking. Today Islamic banking has many associations among its practitioners. For example the Association of Islamic Banking, the oldest and the first of such association. Then coming Islamic Economics Society followed by Islamic Economics Communication Center, and Islamic Economist Association. The purpose of these organizations, more or less are similar, namely to socialize Islamic banking and finance to society. The other similarity is that they do not have sufficient income for financing their programs. All financing mostly come from Islamic financial institutions or the regulator who have their own interest to promote the Islamic banking and finance in the country. Few might come from individual contributors who are generously provide the fund from their own pocket. It is because for them Islamic banking and finance is a form of Islamic mission toward ideal Muslim society.

This condition leads to question of efficiency. Surely that the more associations are there, the more information will flow to the people. More people will be more educated on this field. But from efficiency point of view it might be point to consider. Since more associations will take more cost, then the financing of this organization will have more burden to the industry. However, no one questions such situation for the time being. As old proverb says, as long as the industry is happy with that, then no need to "wake up sleeping tiger".

The next question is, until when?



  


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