Opinion

Islam's response to contemporary world problems (39)

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ECONOMIC PEACE.

We begin a new chapter in the series that we send to our esteemed readers week after week under the title "ECONOMIC PEACE". 

It is our attempt to provide readers with references to the true teachings of Islam, teachings distorted by partisan interests, which are not endorsed in the Holy Quran.

(The Holy Quran references can be found at https://www.ahmadiyya-islam.org/es/coran/).

Introduction
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"Al'lah will remove interest and cause charity to increase. And Al'lah does not love one who is a stubborn disbeliever and an avowed sinner". (2: 277)

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"No, what happens is that you do not honour the orphan. Nor do you encourage one another to feed the poor, and devour the inheritance of the poor; you love wealth with excessive love." (89:18-21)

Economic Philosophy of Capitalism, Communism and Islam

The Islamic economic order belongs neither to capitalism nor to scientific socialism. The economic philosophy of Islam is scientific without being mechanical. It is disciplined without being too restrictive. It allows private ownership and private enterprise but does not promote greed and the accumulation of wealth in a few hands by which a large section of society is rendered helpless and becomes the servant and slave of a ruthless and cruel system of exploitation.

There are three fundamental differences between the economic philosophies of capitalism, communism and Islam.

Capitalism

In capitalism, capital is rewarded with interest. The intrinsic principle that capital has the right to grow is accepted. Interest plays the role of a central driving force for the accumulation of capital, which is channelled as energy to establish and maintain the line of production in motion. In short, interest acts as an incentive to keep capital in circulation.

Scientific socialism

In scientific socialism, although there is no incentive of interest to circulate and recirculate capital as a productive mechanism, the state monopolises capital. Therefore, there is no room for motivation.
In free private enterprise, whether interest is paid or not, the sense of personal possession is sufficient to create the desire to grow one's capital as rapidly as possible. If interest is to be paid on borrowed money, the interest rate acts as a ceiling. It functions as a window through which the relative growth or decline of capital can be controlled.

In the socialist economic system, however, there is no such necessity because those who use capital do not possess it, nor are there any means of comparison by which to judge whether or not the degree of growth is sufficient from the economic point of view.
In the scientific socialist order, the forcible possession of the capital of the whole state by the state itself renders the system of interest totally irrelevant and insignificant. The problem is that when there is no pressure to earn more than the interest to be paid, all incentives and sense of responsibility are lost.

If all the outstanding capital of a communist state could, for example, be valued from the point of view of the amount of interest it would earn if it were deposited in a bank, one aspect of the problem would be revealed. The other side of the coin could be represented by valuing the economy on the basis of profit and loss. No doubt, it would present many complications such as calculating wages, etc. But if financial experts were to study it, such obstacles could be overcome. A comparison between the two systems would show very interesting possibilities.

It is more than likely that the real culprits of declining living standards could be pinpointed in this way. Without going through such an immense mental exercise, it is not difficult to determine the causes of this decline. I believe that, as the state becomes a capitalist, it is deprived of a system of control to prevent it from failures, losses and mistakes in the way it handles state capital, since it has no financial obligations to fulfil and can use the capital without being accountable. There are inherent dangers in such a situation. The lack of self-interest and the absence of an alarm system for losses or profits from the use of capital wreaks havoc with the relationship between investments and returns. The volume of losses continues to increase.

Similarly, there is no control over the policy of channelling capital. For example, there is no mirror in the hands of socialist governments in which they can reflect the real rate of economic growth in comparison with the free market economies of the outside world. An added problem is that communist states need to spend much more on defence, inspection and police institutions within the country. Other things being equal, it requires a disproportionate level of expenditure on defence and the maintenance of law and order. These and similar factors place a heavy burden on the economy. The final collapse for the economy can be delayed, no doubt, but it can by no means be avoided.

The Islamic concept

While communism offers no incentive for direct involvement in the production of wealth, Islam offers such an incentive, despite prohibiting interest. Islam eliminates the system of usury and interest without participating in the specific problems of the communist world. In the absence of interest, which drags capital into non-productive channels, Islam controls idle capital. This control takes the form of a "tax", known as Zakat, which is imposed not only on income or profits but on capital itself.

The contrast is stark. In capitalist societies, capital accumulates in the hands of a few because of the greed to increase that capital through the accumulation of interest, which is recycled into the economy with the preset task of yielding a profit greater than the prevailing rate of interest. If this fails, the economy necessarily goes into recession. In Islam, the fear that idle capital will be progressively depleted by the imposition of Zakat means that whoever has an economic surplus has to use it to make a profit to counteract the effects of Zakat.

According to Islam, the answer to the world's economic problems is not to be found in scientific socialism or capitalism. It is impossible to discuss this subject at length here, but a contemporary view of the imbalance created by capitalism is necessary to learn some lessons for the future.

Four characteristics of capitalist society

The signs to determine that such an imbalance has indeed arisen in society are very clearly explained in the following verses of the Holy Quran:

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"No, but you do not honour the fatherless. Nor do you encourage one another to feed the poor. You devour all other people's inheritance. And you love wealth with excessive love." (89:18-21)

In a nutshell, these characteristics are:

  • Dishonourable treatment of orphans.
  • Failure to promote the feeding of the poor.
  • The usurpation of the inheritance of others.
  • Endless accumulation of wealth.
Capitalism leads ultimately to destruction.

Without endorsing the philosophy of scientific socialism, Islam rejects some aspects of capitalism because:

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"Mutual rivalry in the pursuit of more worldly things has diverted you from God. Till you come to the tombs. No! Very soon you will come to know the truth." (102:2-4)

The changing economic order

The exploitation of the poorest citizens by interest-based capitalism, which gave rise to the socialist rebellion, seems to have been consigned to history. But a closer study reveals that it is merely a change of disguise.

At present, the whole world is divided between rich and poor, thanks mainly to the exploitation of the developed capitalist countries. Add to this the decisive return to capitalism of the repentant Eastern bloc. It makes one shudder to imagine how much blood will still be sucked from the already weakened and anaemic nations of the Third World. It would seem that the vampires of capitalism need even more blood to drink.

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

(To be continued in installment 40, continuing with "Economic Peace" according to the teachings of the Holy Quran.)