99
Issued in the United Arab Emirates
AD 2009
If you were to ask people which twentieth-century invention had most impact on their daily lives today, instant answers might be their mobile phone or their PC: not many people would think first of the little plastic rectangles that fill their wallets and purses. And yet, since they first emerged in the late 1950s, credit cards and their kin have become part of the fabric of modern life. Bank credit is, for the first time in history, no longer the prerogative of the elite, and – maybe as a result – long-dormant religious and ethical issues about the use and abuse of money have been reborn in the face of this ultimate symbol of economic freedom for millions, as some would see it, or, for others, of triumphant Anglo-American consumer culture.
In the last two chapters, we examined sex and war. Now it is the turn of that third great constant of human affairs, money. Money has featured throughout this history, from the gold coins of the legendarily rich King Croesus of Lydia (Chapter 25), and the paper money of the first Ming emperor (Chapter 72), to the first world currency, the king of Spain’s silver pieces of eight (Chapter 80). Now it is the turn of the modern manifestation of money – plastic.
The modern credit card is an American creation, the successor to retail credit schemes pioneered in the early twentieth century. After the end of the Second World War, wartime restrictions on lending were lifted and the credit boom began. The first general-purpose charge card was the Diners Club card, introduced in 1950. In 1958 the next step came with the appearance of the first real credit card, issued by a bank and generally accepted by large numbers of businesses. This was the BankAmericard, ancestor of Visa, and the first universal credit card to be made of plastic. But only in the 1990s did credit cards become truly global, widespread beyond North America and the UK.
Of course, a credit card isn’t itself money – it is a physical object that provides a way of spending money, moving it and promising it. Money is now more likely to be numbers and digits on statements and invoices than physical coins and notes. None of us is ever likely to see most of our savings turned into actual cash, even in a bank vault. Credit and debit cards bring home to us daily the fact that money has now lost its essential materiality; money spent through them is always new, fresh and unused. It can be called up virtually anywhere in the world instantaneously, regardless of national boundaries. Where as all the coins or banknotes we have looked at so far had king and country marked on them, our card acknowledges no ruler or nation in its design and no limit to its reach, other than an expiry date. This new money is supranational, and it seems to have conquered the world. And yet even on credit cards the echo of traditional money remains: the card that is telling our story is keen to present itself as a Gold Card.
What the card does of course is to guarantee payment. A complete stranger can be confident that he will ultimately be paid. For Mervyn King, Governor of the Bank of England, these cards are merely a new solution to an age-old problem:
As in all types of money or cards used to finance transactions, the acceptability, the trust which the other side of the transaction puts in it, is paramount. I could give a different example, which I think illustrates the importance of trust here: when Argentina had its financial collapse, and reneged on its national debt, in the 1990s, its currency became worthless, and in some of the villages of Argentina the use of IOUs as a substitute for paper currency started to grow up. But the problem with the IOU is that the U has to trust the I, and that may not always be the case. So what happened was that in the villages some people would take the IOU to the local priest and ask him to endorse it. Now here we have an example in terms of the use of religion that was not fundamentally about religion as such, but which was about enhancing the trust that people had in the instrument that was being used.
In the absence of a village priest with global reach to endorse our IOUs, we use credit cards which span the world.
This credit card, issued in the UAE, has both English and Arabic writing on it
This particular Gold Card is issued by the London-based bank called HSBC, the Hong Kong and Shanghai Banking Corporation. It functions through the backing of the US-based credit association, VISA, and has on it writing in Arabic – it is in short connected to the whole world, part of a global financial system, backed by a complex electronic superstructure that many of us barely think about as we key in our PINs. All our credit-card transactions are tracked and recorded, building a huge dossier of our movements, writing our economic biographies on the other side of the world.
The scale of modern banks is far beyond anything previously known, and their global power now transcends national boundaries. As Mervyn King emphasizes:
The spread of a wide range of financial transactions, whether using cards used by international banks or the other services that they offer, has created institutions which are trans-national, which are bigger than the ability of national regulators to control, and which, if they do get into financial difficulties – fortunately not many have – can cause enormous financial mayhem.
In the past rulers could walk away from their debt and leave banks to collapse, but today, it is apparently more difficult to allow a bank to fail than it is to see a government fall.
Some aspects of a credit card need no describing. Every credit card in the world is of the same internationally agreed size and shape, to fit in all the ‘holes in the wall’ that now puncture our urban world. In one respect, cards are like traditional coins and banknotes. They have two sides, each holding important information. If you turn this card over, the back shows us a magnetic strip, part of the electronic verification system that allows us to move money around the world relatively securely and permits instant communication, instant transactions and instant gratification. Many cards now incorporate an even more sophisticated piece of electronics, a microchip. It is this microtechnology, one of the great global achievements of the last generation, that has made the worldwide credit card possible – and with it, the worldwide banks. This little black strip is the hero – or villain – of this chapter. All the rest is simply a consequence of it.
Credit cards do something which for most people was never possible before: they allow you to borrow while avoiding both the traditional pawnbroker and the loan-shark. Inevitably, opportunities bring risk. Easy credit undermines traditional values like thrift, because it sets you free from having to save before you spend. So it is not surprising that credit cards have drawn the attention of moralists and been categorized as dangerous, even sinful in their very nature. There is little doubt at all that paying by credit card does increase customers’ willingness to spend – often more than they can afford. So this is an area of banking that leads rapidly to debates about ethics and religion.
Perhaps surprisingly, religion is represented on our card itself. There is a decoration in the middle of it, a red fretwork, which looks like hollow stars, set in a rectangular strip. It is curiously reminiscent of an object we discussed earlier (Chapter 94): the Islamic patterning carved on the side of the Sudanese slit drum when it was taken to the Islamic north of Sudan, to proclaim the new world to which it belonged. Similar patterning makes the same point on our card, for this one is not just issued by HSBC but by HSBC Amanah, the Islamic banking wing of the corporation. This credit card is marketed as being compliant with Shariah law.
All Abrahamic religions have worried about the social evils of usury, lending at interest, that can all too easily result in the poor being driven into debt and eventual destitution. Both the Bible and the Qur’an have forthright things to say about usury, from the prohibitions of Leviticus – ‘Thou shalt not give him money upon usury, nor lend him thy victuals for increase’ – to the scathing words of the Qur’an: ‘Those that live on usury shall rise up before God like men whom Satan has demented by his touch.’
As a result, Judaism, Christianity and Islam have all struggled with the ethics of advanced financial systems: the separation of money from goods, and cash from effort, and above all the social consequences of encouraging debt. The most recent manifestation of this millennial concern has been the rise of Shariah-compliant Islamic banking since the 1990s – Islamic banks now offer services consistent with Islamic religious belief and social behaviour in more than sixty countries. Razi Fakih, Deputy Global CEO of HSBC Amanah, explains:
Islamic finance is a very new industry. Conventional banking and finance has been around for as long as we all remember. Islamic finance started some time in the 1960s in Egypt, and I think it was only in the 1990s that it actually took off, so it’s just less than two decades old in that context.
This credit card is of course the result of the growing economic importance of the Middle East. But it is also a sign of something else, because this banking development runs counter to what, throughout the twentieth century, had become a received wisdom. Most intellectuals and economists from the French Revolution onwards – including Karl Marx – assumed that religion would steadily dwindle as a force in public life, that in the long run the forces of God would yield to the forces of Mammon. One of the striking facts of the first decade of the twenty-first century has been the return of religion to the centre of the political and economic stage in many parts of the world. Our gold credit card is a small but significant part of a growing global phenomenon.