Ibn Khaldun’s Concept Of Social Solidarity And Its implication To Group-Based Lending Scheme – Dr. Asyraf Wajdi Dusuki
Abstract
Asabiyah or social solidarity is the core of Ibn Kaldun‟s thought concerning the rise and decline of the civilisation. It is also a source for economic development and political stability. In the Muqaddimah, Ibn Khaldun emphasises the importance of having a sense of solidarity or „espirit de corp‟ – the state of mind that makes individuals identify with a group and subordinate their own personal interests to that of group interest. Without such willingness to subordinate self to the group, peace and social development may not be possible. The implication of Ibn Khaldun‟s social solidarity concept to the present world is imperative. The concept of social solidarity can be enforced through formation of group-based lending among rural poor communities who are normally denied access to credit mainstream financial institution and market. The poor are usually perceived by the „profit-orientated‟ conventional banks as high-risk borrowers due to inherent difficulties in assessing their creditworthiness compounded by their general inability to provide collateral to pledge against any potential risk. This paper, therefore argues that social solidarity concept is similar to social capital which can be utilised by the poor both as a creation of human capital as well as a substitute for physical capital. Hence it serves as effective mechanism to overcome the many barriers that have prevented large potentially productive segments of the population from access to formal financial institutions.
Keywords: Social solidarity, social capital, group-based lending, financial intermediation.