Opinion

Islam's response to contemporary world problems (42)

photo_camera Qamar Fazal

ECONOMIC PEACE 

We continue to develop the theme of "Economic Peace", linking with the 41st installment. 

(You can consult the Holy Quran references at https://www.ahmadiyya-islam.org/es/coran/

To further aggravate the situation, in societies where people are primarily concerned with the pursuit of pleasure, it is impossible for them to self-impose the expectation of a long period of true austerity after certain periods of reckless spending. More money is borrowed, recklessly, and spending is stretched beyond income. In effect, decades of future revenues, subject to progressive debt repayments and similar problems, are pledged to lending banks and financial institutions. 

These economies, as a whole, are inevitably moving towards a major crisis. One cannot pledge one's future indefinitely without first reaching the precipice of financial crisis arising from irresponsible spending, which, in turn, drives up the rate of inflation. Fighting inflation by raising interest rates, in the hope of decreasing the amount of money available for spending, inevitably triggers a chain of events that culminates in economic recession. 

This is bad enough on a national scale, but when the same factors trigger a recession in most countries of the world, global recession looms large. These global recessions pave the way for world wars and giant catastrophes. 

Liquidations and bankruptcies increase. Trade and business go into decline. Unemployment begins to soar. Real estate collapses. The resulting global frustration, in all areas, becomes an accomplice to homelessness, deprivation, fraud and crime. If all this is happening, it should surprise no one, least of all the solid defenders of capitalism. 

In the capitalist economy the situation does not simply involve financing private individuals beyond their means of repayment. In fact, the future of the whole industry is risked at the cost of certain temporary gains. Initially, of course, the country's industry benefits greatly. It helps to lower the prices of goods produced in the country. The transfer of money to an individual not only stimulates his purchasing power, but also has an impact on the productivity of domestic industry. Increased demand is followed by increased production, and with increased production comes lower costs. This gives domestic industry a competitive edge in international markets. Everything looks rosy. Then comes the hangover. 

When, because of impatience and overspending beyond its capacity, the whole society finds itself deeply in debt to the banks, the purchasing power of the whole society reaches the end of its tether. Industry has no alternative but to look for larger foreign markets to stay afloat and maintain competition. The smaller the economic base of the country, the sooner it reaches the end of the dead end. The larger the economic base, the longer the period when they finally realise the inevitable crisis. 

Let's look at how things work in the United States. It is undoubtedly the country with the largest domestic market to support its industry, so much so that some economists argue that even if the United States were to be expelled from the international community, the broad base of its domestic market would ensure the survival of its industry. However, such economists do not take into account other associated factors. If one were to apply, for example, the case discussed above to the American scenario, it would be evident that there would be no logical conclusion other than the one described above. It is only a matter of time. With a huge public deficit and trillions of dollars of foreign debt, the United States has overspent and the American public finds its future mortgaged under the weight of a huge debt. The purchasing power of the entire nation is destined to decline dramatically or else the borrowing entities will go bankrupt. It is only a question of size. But the inevitable laws of nature operate and apply equally to all such situations. 

In the summer, pools and ponds heat up quickly, while lakes take longer. Similarly, smaller seas warm up sooner than larger ones, although they all follow the same fate. The Pacific Ocean takes so long to warm up that by the time it does, winter has set in for most of the countries bordering this giant body of water. As a result, its climate is more moderate than that of the land bordering the small oceans. 

So it is also with the oceans of the economy. The philosophy of spending on borrowed money is so twisted that it is folly to expect honest and immediate results. 

Another important factor has to be taken into account. When industry and the national economy reach the point of suffocation, the poorer and less developed nations face an increasing danger of suffering the consequences of the explosive situation of the advanced nations. 

This begins with the progressive urge of political leaders to sell more goods to the markets, to save industry from slowing down and to maintain the standard of living of their citizens. The problem they face is twofold: 

a) People are used to modern comforts; and, 

b) For their own survival, industry continues to thrill them with new inventions and gadgets that bring pleasure and comfort into their homes. 

No politician or ruler can survive the pressure of a public that continues to demand higher standards of living. The economy must be kept afloat at any cost. 

Obviously, Third World countries have to be bled even more to keep living standards in the more advanced countries artificially high. Why not talk about the new challenge of the reformed economies of Russia and Eastern Europe and the growing need for foreign markets for the new capitalist states emerging from the former communist world? And why not talk about the havoc that the Western media are wreaking by playing on the desires and ambitions of the poor and destitute in the socialist and Third World nations? All these factors together will not change the face of the earth for the better. 

Interest as a threat to peace 

This is the stern warning conveyed to mankind 1,400 years ago by The Holy Quran regarding the holocaust in which mankind would eventually become embroiled due to interest-based economies.

Qamar Fazal

"Those who devour with interest will not rise, except as one who has been struck down by Satan with madness rises. That is because they say: "Trade is like interest", when Al'lah has made trade lawful and interest unlawful. So whoever is warned by his Lord and desists, what he received in the past will be his, and his case is in the hands of Al'lah. But those who backslide will be the dwellers of the Fire; they will dwell therein. Al'lah will remove interest and cause charity to increase. And Al'lah loves not one who is a stubborn disbeliever and an avowed sinner.  Verily, those who believe and do good deeds, and perform the Prayer and pay Zakat, will receive their reward from their Lord, and no fear will overtake them, nor will they be afflicted. O believers! Fear Al'lah and give up what is left of your interest, if you believe. But if you do not, then wait for the war of Al'lah and His Messenger; though if you repent, you will have your original sums; so you will neither harm nor be harmed. And if any debtor is in difficulty, grant him a respite until he is better off. And if you forgive him as alms, it will be better for you, if you knew!" (2:276-281) 

The warning of a war declared by God, mentioned in the above verses, means that the laws of nature governed by God would begin to punish the capitalist society when the factors discussed above would finally lead man to economic imbalance and war. Disorders, riots and wars always follow the exploitation and usurpation of the rights of the poor. "But if you do not do so, wait for the war of Al'lah and His Messenger..." means that the state that grows upon interest, inevitably ends up in a situation where nations take up arms against each other. 

Space does not permit me to comment on this aspect of interest. In The Holy Quran, verses prohibiting interest always follow verses about war. This indicates the relationship of interest to war. Whoever is familiar with the history of World War I and World War II will remember that capitalism played a disastrous role, not only in causing but also in prolonging these wars. 

(lpbD) - Peace and God's blessings be upon him. 

(To be continued in Issue 43, elaborating on "Economic Peace" according to the teachings of the Holy Quran)