[Spaceships] Islamic Banking and Financing Spaceships Purchases

[whswhs]

Originally Posted by jason taylor

It's both. If one brand of coffee gets a higher price because all the Bohemians in town hear rumors that, "every other brand uses coffee produced by whip-scarred serfs and this one gets it from honest deals with honest freeholders" then it has given it a higher price for a value judgement. If the rumor is true then it deserves it's extra price. The price comes from the ethical superiority.

Sure, but it would work exactly the same way in economic terms if there were a large class of sadists who enjoyed seeing images of whip-scarred serfs and gloating over them, and would pay more for that brand of coffee.

[Curmudgeon]

Originally Posted by malloyd

<snip>
In any case, why should that be the responsibility of the lender? The borrower presumably should be smart enough not to borrow money for something that is going to fail too.
<snip>

Originally Posted by vicky_molokh

On the topic of responsibility: the opinion whether or not it should be the responsibility of the lender will of course vary by culture.
<snip>

Originally Posted by Anthony

It's the responsibility of the person spending money how they want to spend the money. A money lender can look at how someone wants to spend money they have been lent, and choose to not lend them money if the plan is bad (this is very common for corporate loans), but it's still the responsibility of the borrower what they want to spend money on.

These quotes seem to be at the heart of the problem you're having. Sharia banking is, at a guess, a term of convenience, to get across the general sort of activity the Bank engages in. It is not, however, a bank in the sense that we in the West are used to thinking of the term.

It is a partnership and we'd be better served in thinking about how it works if we dropped the use of the terms lender and borrower entirely and substituted the word partner. That done, I suspect a number of knottier problems will fall away as, "Well, that would be fine for a borrower-lender relationship, but it's nonsensical if you're talking about a partnership."

[Anthony]

Originally Posted by Curmudgeon

These quotes seem to be at the heart of the problem you're having. Sharia banking is, at a guess, a term of convenience, to get across the general sort of activity the Bank engages in. It is not, however, a bank in the sense that we in the West are used to thinking of the term.

Well, this assumes you think Sharia banking is more than just semantic games. Assuming it is, however, what this amounts to is "loans, as described on SS2:27, do not exist".

This is not impossible. There are other ways to raise funds for commercial ventures, and it's perfectly possible that spaceships are not funded via conventional loans (the most likely alternative being cash for equity swaps, such as venture capital or issuing stock; it is somewhat peculiar that SS2 doesn't even discuss this). However, they render the discussion of interest rates moot, because charging interest requires making a loan, and that's not what you're doing. It's also problematic for non-commercial loans, because there's no actual business to be a partner in.

[cptbutton]

Originally Posted by Anthony

Well, this assumes you think Sharia banking is more than just semantic games. Assuming it is, however, what this amounts to is "loans, as described on SS2:27, do not exist".

This is not impossible. There are other ways to raise funds for commercial ventures, and it's perfectly possible that spaceships are not funded via conventional loans (the most likely alternative being cash for equity swaps, such as venture capital or issuing stock; it is somewhat peculiar that SS2 doesn't even discuss this). However, they render the discussion of interest rates moot, because charging interest requires making a loan, and that's not what you're doing. It's also problematic for non-commercial loans, because there's no actual business to be a partner in.

To drag this on to one of my favorite ideas, the Family starships in Citizen of the Galaxy and Cherryh's Union/Alliance stories might come from a de facto reality of banks not being willing to finance starships because they are too hard to repossess.

So the family owns the ship and everyone lives aboard. When you have enough saved, you buy another ship and split the family into two. Or cut a deal with another family both buy a ship and staff it from both ships.

(Except in the U/A setting there is little or not merchant shipbuilding during the times shown because of war an politics.)

[whswhs]

Originally Posted by Anthony

Well, this assumes you think Sharia banking is more than just semantic games. Assuming it is, however, what this amounts to is "loans, as described on SS2:27, do not exist".

Yes. You're free to make "no interest may be charged on loans" a formal rule that has well understood and long established workarounds. And then really you have a system equivalent to ours, but with Law, Administration, and Accounting requiring different familiarities or even different optional specializations. Or you can make it an actual restriction, and deal with the consequences of not being able to access cash for commercial transactions except from personal savings, selling personal assets, or retained earnings from a business.

And both systems may well be described by saying "It's not possible to lend money at interest." The trick is to know what that means in practice.

[jason taylor]

One possibility is that the receiver does some kind of favor(such as burying the lender's assassinated son) that the Mullah can't track.

[jason taylor]

Originally Posted by whswhs

Sure, but it would work exactly the same way in economic terms if there were a large class of sadists who enjoyed seeing images of whip-scarred serfs and gloating over them, and would pay more for that brand of coffee.

That sounds like MESAN brand Coffee in Honor Harrington.