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View Diary: Can the Sioux hold off the vampires? Can we help them? (65 comments)

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  •  You describe investment banking (1+ / 0-)
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    SethRightmer

    Lending for profit is one way to get funds into a venture, but it's not a necessary feature of capitalism. In the real world, many things fall short of their ideals. Without capitalism, the same businesses would persist, but would merely be privately held by wealthy families. It falls on us to counter the power of businesses with the power of government, irrespective of those businesses' ownership.

    As I understand, lending at a fixed rate to make some profit on top of an expected risk is what Islam prohibits. Buying shares in a venture to share in both the actual risk and reward is allowed.

    Why is there a Confederate Flag flying in Afghanistan?

    by chimpy on Wed Aug 22, 2012 at 10:34:50 AM PDT

    [ Parent ]

    •  Huh? (1+ / 0-)
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      chimpy

      I don't see how that follows. What about partnerships? Perfectly serviceable business model, requires no lending for profit, allows the little guy to pool resources.

      You are right about Islam, in that you can buy shares in a venture but not lend for excess profit (some profit to cover expected risk is, of course, a feature of any system that allows lending at all. It might not get called "profit" though.)

      Originally, with the VOC, (first corporation, the Dutch East India Company) the whole thing was supposed to last for a fixed period and then the VOC was supposed to buy back shares from the investors. Never happened. Pretty much all the other original checks and balances to corporate power got thrown out, too.

      The problem with the corporate structure, and the moral hazard of limited liability, is a whole other kettle of fish, however. My issue here is the way the modern world has enshrined the sin of usury as the financial and moral center of our society. And thus my rant about capitalism, as opposed to a rant about corporations (which I can provide, if you like.)

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