Re: Islamic Economic System
- From: "Altway" <altway@xxxxxxxxxxxxxx>
- Date: Sat, 10 Dec 2005 14:24:56 -0600
Question:-
You have given the Philosophy and the Theory behind an Islamic Economic
system, but can you tell us what is would be the practical difference
between an Islamic Economic System if it were to be established and the
current Western systems?
Answer:-
In practice things depend on circumstances and the nature of people. But if
a community were truly Muslim and return to the principles of Islam, then
certain differences would inevitably exist:-
Firstly, an Islamic Economic system would be part of the Religion, but it
would serve the Social System which in its turn would serve the Spiritual
goal. This is the reverse of what now exists anywhere in the world.
Muslims are required to avoid alcohol, drugs, and gambling and other kinds
of harmful or useless vanities such as excesses in cosmetics, fashions and
jewellery. A great part of Western Industry is devoted to just these things
and wastes the natural and human resources. Most of the clothes worn by
Muslims tend to be versatile and in a small range of designs and sizes.
Materialism and greed (desires greater than needs and what is beneficial)
are stimulated and propagated by the controllers of Industry in order to
increase their profits, which they wish to do because they have been
affected by the same pressure. We have a vicious circle and the initiators
are their own victims.
Muslims are required to respect natural resources, use them in the most
economical and useful manner, avoiding wastage, pollution and disruption of
the environment. This means that they will not clutter up their homes with
unnecessary useless junk or multiple instances of the same products which
are seldom used. For instance, twenty suits of clothing are hardly needed
when a person can wear only one at a time and a few changes will do. It is
estimated that an average household in the West can dispense with up to 50
percent of the products it has without making much difference to their life
style. This means that a great part of the industry, based on the desire to
make a making profits by pushing their goods through advertisement and
propaganda, would become redundant. Resources would be saved to be more
usefully used, and they would be cheaper because of less demand, and the
work force would need to work far fewer hours and could employ their time in
more valuable ways. There should be no false tempting advertisement,
persuasion to buy and pressure salesmanship, but a "Directory of Goods,
Services and Facilities" could be produced and distributed in the same way
as Telephone Directories are, by a Department that tested, described the
products impartially and comprehensively and their appropriate uses, set
standards, collected information about needs and made recommendations to
manufacturers.
This, however, would lead to unemployment in the West. This is because most
of the work force is employed by the owners of the industries and can be
discarded like so much useless rubbish when they wished. But such employment
where the few control the many not only physically, but also mentally and
spiritually, can be regarded as a modified form of slavery that Islam was
meant to abolish. Islam requires self-determination, personal responsibility
and mutual consultation. This means that agreements, partnerships and
contracts should replace employment.
Companies can be formed in which all the workers own shares and the Profit
(calculated as the total income from sales minus cost of materials and
machinery) is shared out. There is no distinction between wages, salaries
and profit, and each person has an interest in the prosperity of the
company. The Company is run in a Democratic manner by the participation of
all in the planning and decision making process. However, in so far as the
work force is Muslim and obeys Allah, it submits to the values of Justice,
Benevolence and Truth. This means that those who have the knowledge, virtue
and ability are respected, listened to, and given the higher position of
authority for the greater benefit of all. Membership will require certain
appropriate qualifications and may vary in rank and all can strive to
improve these according to their abilities without the restrictions and
ruthless competition that a rigid hierarchical system creates. As there is
no separation in Islam between the various departments of life, the company
itself would be versatile and cater for the health, educational, housing and
welfare of the members and it would retrain its work force as needed. It
also carries out research and development and can do so in co-operation with
other Companies.
As the workers are the owners, there can be no takeover of one company by
another, but mergers can take place. Monopolies would not occur as everyone
is independent and can set up any company. Economic changes do occur owing
to changes in circumstances, production, innovation and demand. But if a
workforce of, say 100 people, works a certain amount of time to produce a
certain amount of goods from the sale of which they earn, say 1000 money
units, then this is the total price of the goods and it is also the amount
of money they have to buy those goods. There is a perfect balance. If a
technique is invented that makes production cheaper then this means that
less time is used to manufacture it. Or more can be produced in the same
time because lower prices could increase demand. If one company increases
its sales of a certain product because it is better or made more efficiently
and this reduces the sales of another, then the balance could be restored by
lowering the price of the second, the migration of workers from one company
to another, or by a change of production in the other Company.
The balance could be disturbed because of industrial secrecy, factors that
obstruct the flow of workers, of money, of information, or resources or
because of Patent Rights. No Industrial or Political secrecy should be
allowed in Islam as all things that affect the public are a concern for the
public. Members of the Public have a right of access to all relevant
information and investigation is a duty of the Law and News and Information
Agencies that are also independent Companies based on qualifications
publicly recognised. No one can own the achievements of another. The
inventors can be given the right to charge a certain percentage from the
sale of goods that utilise their invention which is otherwise free to all.
Inventions often depend on the existence of research facilities that require
investment. The investor, too has a right to a return as a percentage of the
price of goods.
In general the Economic Balance is disturbed when a separation occurs
between work, goods and money, owing to the accumulation of money in Banks.
This often happens owing to Usury, the profit made by lending out surplus
money (that which not used to purchase goods and services), thereby
increasing the surplus. It also distorts the economy by making money, which
is a medium of exchange, into a commodity that can be bought and sold. Islam
requires people to spend their money and not accumulate it or to hoard
materials or to ignore the needy who have no work. The Western system of
employment fixes the amount of time the employee must work and how much he
is paid. This causes economic malfunctions because it takes no account of
what people might need. When such employment is abolished it becomes
possible for people to work as much as they need to obtain what they need,
thereby co-ordinating work with satisfaction and supply with demand.
Justice demands that the reward (or penalty) should be equivalent to the
effective work done. Islam, therefore, forbids Usury, but encourages
investment. The difference is that the investor is a partner in the
enterprise and shares the risk of loss and profit. Islam also forbids
gambling for the same reason and this would also apply to the Stock Market
(which to a large extent becomes redundant). It would be forbidden to make a
profit simply by buying and reselling things without any service whatever.
All re-sales done within a minimum period will have to be made at the
previous sale price.
It is noticeable in the West that the economic conditions have forced women
into the labour market, thereby making labour cheaper by increasing the
amount of labour. But this suppresses mechanisation and improvement in
efficiency and also wages, thereby reducing the family income, which creates
the pressure that forces women into the labour market. We have a vicious
circle. The pressure is increased by the stimulation of materialism and
greed. Women have also become partially redundant owing to birth control and
abortions, the taking over of children by the educational service, and the
progress of technology that has taken away their traditional domestic
functions. But the departure of women from the home has led to a great
number of social and psychological problems for children as well as the
spouses. It has broken down the family where the mental development of the
next generation is best conducted, and this has led to the progressive
disintegration of the society. The stresses and emotional deprivation so
caused also encourage materialism and greed as compensation, which in its
turn, adds pressure on the environment. In order to deal with these
consequences a great number of people have to be employed by the State or
privately and this has created the very positions where women are employed.
But this has not solved the problem because carriers or jobs do not involve
the workers in the intimate, personal and responsible way as being a member
of the family does. But the money used to pay these people to deal with the
social and psychological problems comes out of the incomes of community
directly or indirectly, publicly through taxes or privately, thus reducing
the effective income for other things.
>>From the Islamic point of view these tendencies can be reversed. This money
can be used much better by restoring the more natural and suitable role of
women as the binding centres or "knots" in the social network. Islam
recognises the separate property rights and incomes of men and women and
requires that the wife should receive a share of the husbands income in
return for her services. Marriage is a contract and husband and wife are a
partnership and the welfare of each is dependent on the fulfilment of the
role of the other. This could mean that, in so far as the Company is a
family business or a partnership, wives and other members of the family
could have a function in the Company. It could also mean that women have a
partly separate organisation. Times are changing, there is a shift of
emphasis and importance from the Physical sciences to the Biological, and
increasingly to the Human Sciences and this reflects in the type of new
professions, careers and industries. With the increase of knowledge in
Psychology, Sociology and Medicine, dealing with the welfare and development
of the next generation and the over all health and welfare of the society in
general requires considerable amount of expertise which women can undertake.
Wives and mothers could help each other with children and running homes and
the social fabric in general. This is not to say that they should be
excluded from other sciences, engineering or commerce, but that their
valuable function and self-fulfilment should not be obstructed by perverse
and destructive values and ideologies.
A number of other differences could also be mentioned, however, it will only
be known what can be effectively done when real efforts are made to
establish an Economic system compatible with Islamic ideals and when it is
also known what the conditions of life then are.
Hamid S. Aziz
.
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