by Rodney Shakespeare
Monday/Tuesday, 26th/27th January, 2004
Trisakti University, Jakarta, Indonesia,
Money and the Real Economy
In order to understand the significance of this Report,
it is necessary, firstly, to go to www.globaljusticemovement.net,
then to Articles and
then read the following:–
• Foreword written
by Rodney Shakespeare to Professor Masudul Choudhury’s
magnum opus The Islamic World-system
• Paper on
Binary Economics for the Trisakti conference
given to the Trisakti conference
Indonesia is the world's largest archipelago of more than
17,000 islands of which 6,000 are inhabited. The population
is estimated at 235,000,000 of whom around 90% are Muslims.
Indonesia is a vast polyglot nation. It faces severe economic
development problems. There is rich-poor division and extensive
of the $1 to $3 per day level. Given the poverty –
it is at the side of motorways, underneath the flyovers,
sitting on the footbridge etc –
unemployment figures are essentially meaningless (and, in
any case, government figures, where they exist, are not
to be believed).
In 1998 there was the East Asian crisis and, the international
advice was that there was no alternative to the policy recommendations
of the IMF. At Trisakti University there was protest and,
given the widespread poverty (patently obvious in Jakarta,
for example) it was perhaps inevitable that the protest
would be violently crushed. Four Trisakti students were
killed. The memory of those students is honoured because,
in a crude way, they got things right and international
advice was wrong. It is not surprising that, today, the
CIA describes Indonesia’s relations with the IMF as
“strained”. Furthermore, it is highly relevant
to note that Malaysia did NOT follow the IMF recommendations
indeed, it did the opposite –
and two years later, in 2000, the IMF was forced into a
grudging admission that Malaysia had got things right.
So, broadly, Indonesia has big problems, the conventional
remedies have failed and right in the centre of Jakarta
is a university which has stood up and paid a terrible price
for doing so. Yet that university got things right and hence
now has high status. Moreover, it knows that anger at the
failure of the conventional nostrums is pointless –
rather, it has to find new policy, a new solution, indeed,
find a new paradigm. Without that new paradigm Indonesia
cannot hope to solve its long-term problems. And, at the
same time, moderate Islam is also out to find something
new, indeed, a new paradigm to express Islam in a modern
and immensely positive way and, if it does not find it,
then, one way or another, the potential for destruction
At the conference, therefore, two forces or streams of thought
and activity (rather than one) were expressing themselves:–
• Trisakti University, determined to find a new, creative,
positive thinking for Indonesia
• moderate Islam determined to find a new modern,
positive thinking for Islam.
There is little point in attempting to go into detail about
the papers which were presented and what was the discussion
in and out of the conference hall, but the overall result
was clear –
Trisakti university and moderate Islam believe that they
have discovered key elements of the necessary new paradigm
and, although there are many other elements (particularly
with moderate Islam), the terminology being used is “the
new paradigm of binary economics” or “binary
economics, the new paradigm”.
As to what those phrases mean the following is an attempt
to provide a little more detail:–
The supply of exogenous money should be decreased and the
endogenous supply (in the form of interest-free loans) increased
for the purposes of:–
Public capital investment thereby allowing
hospitals, roads, bridges, schools etc. to be constructed
for one half, one third or even less of the present cost.
One half or one third of the present cost –
because there is no interest to pay.
Private capital investment if such investment
creates new owners of capital and if such use is patently
for the benefit of all and is non-inflationary. This is
binary economics. By using interest-free loans, administered
by the banking system, a company would get cheap money as
long as new shareholders are created, new shareholders who
are not the existing rich. All individuals would eventually
have a basic income coming from productive capital.
Green investment, particularly for clean,
renewable energy. At present, using interest-bearing money,
a lot of green technology is not financially viable. With
interest-free money, however, it would become viable.
Thus we could have clean electricity through tidal barrages,
dams, windmills, wave machines, solar electricity, and geothermal
Small and start-up businesses thereby freeing
them from the crushing pressure of interest-bearing debt.
In the case of small businesses, there would be no requirement
for wide ownership.
Very importantly, these four uses –
for public capital projects, private capital projects if
wide ownership is involved, green capital investment and
• would back the currency with assets,
• break the grip of usury,
• and because they are directly related to productive
capacity, would be counter-inflationary. The counter-inflation
would happen because, once the capital project is built,
and the money is repaid, the money is cancelled, leaving
the productive capital asset behind.
The four uses, moreover, would:–
• implement a genuine free, fair and efficient market;
• throw off foreign and financial elite control,
• address social and economic justice through the
spreading of wide capital ownership and its associated capital
income. A basic income for all would be possible.
The four uses of the new endogenous money would run alongside
Islamic Banking as it is developing in Indonesia.
Readers of this Report will recognise that, while the term
“binary economics” is being used, the ideas
above are also those of Seven Steps to Justice and the Global
Justice Movement as well as of binary economics. But binary
economics has a specific and practical focus, concentrating
on the real economy, and Trisakti University, at the very
least, can, in future, be expected to use the binary description.
There were many aspects to the conference situation which
had extensions and intertwinings everywhere but, of many
matters, two of particular interest to the Global Table
• Canon Peter Challen is to be invited to write the
Foreword to a new book by the foremost (by far) top moderate
Islamic academic –
• Rodney Shakespeare, who was presented to the Vice-President
of Indonesia, is to be invited to return to Triskati to
Rodney Shakespeare - Christian Council
for Monetary Justice, UK (ccmj.org),
& London Global Table - www.globaljusticemovement.net.
Private address: 11, Charman House, Hemans Estate, London,
SW8 4SP, UK.
Tel: +44(0)20-7771-1107. Email: email@example.com