Re: Islamic Economic System

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.

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