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Isambard
10-14-2007, 07:33 PM
Hello

I finally got around to creating this thread (was sick for awhile and had an exam :()

In another thread, someone mentioned that a (ideal) Sharia state would be economically superior to the mixed economy of current western countries.

My question is why?

From my humble understanding of Shariah llaw, interest is a no-no, yet an ideal Shariah state would have considerable spending on social programs/public works.

If such a state were to exist, how would it deal with business cycles and growing inflation w/o interest rates?

Will have mroe questions when I think of em ;)
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جوري
10-14-2007, 08:12 PM
shari3a law in many ways is like a socialized democracy but there is nothing holding you from having your own business and growing and having competetion in essence (clean capitalism)... during the prophet's time a lady named Hind took from state funds to start her own business.. there is nothing stopping anyone from doing so.

If you look at the system in the U.S you'd be surprised how many are living under poverty level.. if not down right bankruptcy...
People only get the false impression of ownership, but their cars are leased with high interest, and so are there children's education as well as their mortgage and health care is a mess. In other words unless you are independently wealthy because you are Rockefeller or John Pierpont Morgan or related to them, you are in debt and paying for debt until the day you die.

I am not an accountant and I don't know the first thing about business or economics and am the first to admit it, but I am a U.S citizen and I see my colleagues even those who have had a fantastic graduate education making great sacrifices well into their forties so that the best years of their lives have passed them by.
They have children late, get married late because a big part of marriage is financial responsibility.. Many others take the low road have their kids at 14 and live off the rest tax money but that is no way to live.

Some live in NY and work in NJ and end up paying NY tax and NJ tax plus all the other cute things along where literally 1/2 of their sizeable salary is spent on funding Bush's wars and war campaigns on TV 'if your child wants to become a man listen' call the U.S army and these commercials are aimed at blacks and people from low socio-economic conditions if we can be any more obvious?

perhaps you can tell us where the advantage is of imposing ridiculous interests at rates of 22% and higher where people have no choice but pay their visas with their master cards and eventually falling behind on payment and not making any of it at all?

Either way the obligatory zakat will take care of where the state or any other banks falls short...
Justice for humanity doesn't mean justice for the elite few but for everyone..
my two cents.. anyone feel free to add, subtract, as acknowledged prior, business, finance and economics are about as exciting to me as a Reproduction of Mark Rothko 'Black on Grey'

peace!
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Isambard
10-14-2007, 08:28 PM
Well it really has to do with the old question "better for one person to die to save the others, or for all to day to not make the choice?"

Without playing the interest rates, a gov't/central bank would have no way to curb business cycles. Sure they eventually bounce back, but with every cycle the recession typically gets worse and lasts a bit longer. Eventually what you get is a Depression (30s Depression for ex.).

Interest rates are also useful to control inflation and especially useful if you are to have a gov't with lots of spending (such as the model pro-Shariah folks proclaim) as gov't spending speeds up inflation.

Essentially, interest rates are used to control/stabilize the economy and a state w/o it just seems to me like using a car w/o a steering wheel
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جوري
10-14-2007, 08:42 PM
I disagree.. I say this because history records the height of economic/intellectual/scientific boom under sharia'a law that is unequaled today...

I think the problem is, you need to see how the other half lives to appreciate how the system isn't working. It is all one gargantuan lie

check out the national debt
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 14 Oct 2007 at 08:37:40 PM GMT is:

$9,047,135,216,416.76

The estimated population of the United States is 303,254,550
so each citizen's share of this debt is $29,833.47.

The National Debt has continued to increase an average of
$1.42 billion per day since September 29, 2006!
Concerned? Then tell Congress and the White House!
http://www.brillig.com/debt_clock/


with what little I know on the subject matter.. I'd say one of us is greatly disillusioned.. and I don't think it is me... I just happen to see very poor people on daily basis of whom interest hasn't helped any... and I fail to see how it will?

This was actually a project I wanted to take on in the future (openning an interest free bank for Muslims) but from the looks of things I'd rather divert my attention toward something more immediate and realistic...

peace!
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- Qatada -
10-14-2007, 08:44 PM
This might be beneficial:

http://www.usc.edu/dept/MSA/economics/


Politics

Commerce & Employment




Peace.
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جوري
10-14-2007, 08:47 PM
Jazaka Allah akhi..I feel apprehensive entering into sciences well beyond my sphere and interest.. but I don't think I need an MBA to realize how a capitalist system has failed in many ways, the links you have provided are great.. I am off to do some reading!
:w:
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Trumble
10-14-2007, 08:50 PM
I must confess to being a traditional Marxist which, oddly, is rather more compatible with my religion than you might think. A Sharia state is therefore only marginally less of a depressing prospect than a Western capitalist one - both oppress and alienate people from their true nature rather than allowing them to become what they truly have the potential to be. Something other than the disaster area humanity currently is.

Abolish property rights in favour of common ownership of the means of production. End of problem. :sunny:
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Keltoi
10-14-2007, 09:04 PM
format_quote Originally Posted by Trumble
I must confess to being a traditional Marxist which, oddly, is rather more compatible with my religion than you might think. A Sharia state is therefore only marginally less of a depressing prospect than a Western capitalist one - both oppress and alienate people from their true nature rather than allowing them to become what they truly have the potential to be. Something other than the disaster area humanity currently is.

Abolish property rights in favour of common ownership of the means of production. End of problem. :sunny:
You believe that common ownership and redistribution of wealth is the way to go correct? Then how can any one individual reach their potential when their labors do not benefit them to any greater extent than the guy or gal who doesn't put as much effort into their labors? Just curious how you believe Marxism leads to individuals reaching their potential.
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جوري
10-14-2007, 09:27 PM
Enough Keltoi is on your case trumble.. but there is nothing in Shari3a law that prevents clean capitalism, and I mean that as the example Isambard gave
format_quote Originally Posted by Isambard
"better for one person to die to save the others, or for all to day to not make the choice?"
is simply unacceptable.. It isn't ok for one poor guy to die so lots of rich people can live better.. and I already gave the example of a lady 1400 yrs ago taking from state fund to start her own business..
Prophet's first wife had her own business.. I don't see why excelling in business or anything else is bad really? or why we are to equate in the same economic status, someone who lives on handeouts to someone who works his behind off to be better and afford better for his family?
I mean even religiousely there is a distinction between someone who works all day and the other who worships all day.. the one working being the better of the two!

There is nothing wrong with clean competition especially where it benefits the people and gives them choices and forces others to have clean business habits!

peace!
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Trumble
10-14-2007, 09:42 PM
format_quote Originally Posted by Keltoi
You believe that common ownership and redistribution of wealth is the way to go correct?
Common ownership does not involve 'redistribution' of wealth as that concept must necessary include private ownership.

Then how can any one individual reach their potential when their labors do not benefit them to any greater extent than the guy or gal who doesn't put as much effort into their labors? Just curious how you believe Marxism leads to individuals reaching their potential.

An understanding of what Marxism IS would answer that question - it is precisely about realization of human potential; economics is a side-issue.

It rather depends on how you define 'potential'. If you define it in terms of acquiring material wealth you would have a point, but in a Marxist (I'll use that instead of 'communist' as there have been plenty of regimes claiming to be that that have been nothing of the sort) society that idea is meaningless. There are many sorts of 'potential' - many of which provide a far greater chance of obtaining happiness and self-realization than obtaining wealth. The Marxist idea that man can only self-realize when being able to fulfill his true nature as a productive 'species-being' is one, but most religious beliefs are, of course, another. The 'true' Christian position on material wealth as I understand it is that anything in excess of basic needs should be given away to those without sufficient resources to satisfy basic needs - but there an awful lot of rich Christians and an awful lot of starving people. What action would best realize the potential of both groups?
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Keltoi
10-14-2007, 10:14 PM
format_quote Originally Posted by Trumble
Common ownership does not involve 'redistribution' of wealth as that concept must necessary include private ownership.




An understanding of what Marxism IS would answer that question - it is precisely about realization of human potential; economics is a side-issue.

It rather depends on how you define 'potential'. If you define it in terms of acquiring material wealth you would have a point, but in a Marxist (I'll use that instead of 'communist' as there have been plenty of regimes claiming to be that that have been nothing of the sort) society that idea is meaningless. There are many sorts of 'potential' - many of which provide a far greater chance of obtaining happiness and self-realization than obtaining wealth. The Marxist idea that man can only self-realize when being able to fulfill his true nature as a productive 'species-being' is one, but most religious beliefs are, of course, another. The 'true' Christian position on material wealth as I understand it is that anything in excess of basic needs should be given away to those without sufficient resources to satisfy basic needs - but there an awful lot of rich Christians and an awful lot of starving people. What action would best realize the potential of both groups?
Well, I believe the opponents of Marxist economics would point to a stagnation of human creativity and innovation. Of course, according to Marx, true communism can only be achieved after a capitalist system has reached its peak, meaning the innovation and productivity is already there. It's an interesting debate, and my intention was not to attack your position, simply exploring the issue.
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Amadeus85
10-14-2007, 10:17 PM
format_quote Originally Posted by Trumble
Abolish property rights in favour of common ownership of the means of production. End of problem. :sunny:
Oh many tried to do it, really many. Im sorry to say but as i see it, Marxism is like the Anti-Midas. Midas turned to gold everything that he touched. Marxism turned - to disaster everywhere it appeared. You have examples everywhere in world bro - Cuba, All former soviet countries,Cambodia.
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Trumble
10-14-2007, 10:52 PM
format_quote Originally Posted by Aaron85
Oh many tried to do it, really many. Im sorry to say but as i see it, Marxism is like the Anti-Midas. Midas turned to gold everything that he touched. Marxism turned - to disaster everywhere it appeared. You have examples everywhere in world bro - Cuba, All former soviet countries,Cambodia.
Marxism has never been tried in practice. In those countries, and others (most of which derive from Soviet and Maoist models that have very little to do with Marxism beyond some shared terminology) have claimed to, but in all cases the actual consequence has been the replacement of one ruling class with another, who have centred control of the means of production on themselves in all but name.

As Keltoi correctly states, it has never been tried because the necessary conditions for it have yet to occur.

BTW.. Cuba hardly belongs in that list. I don't like the regime as it is certainly repressive of political dissent, but it's laughable to claim that it is a 'disaster'. Their healthcare system is one of the best in the world, and without American sanctions the Cuban economy would have been more successful than any other in the Caribbean.
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snakelegs
10-14-2007, 11:05 PM
format_quote Originally Posted by Trumble

BTW.. Cuba hardly belongs in that list. I don't like the regime as it is certainly repressive of political dissent, but it's laughable to claim that it is a 'disaster'. Their healthcare system is one of the best in the world, and without American sanctions the Cuban economy would have been more successful than any other in the Caribbean.
for years cuba was definitely the most successful of all latin american countries. education, access to health care, elimination of poverty etc etc
of course, it used to receive massive amounts of aid from the ussr.
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Amadeus85
10-14-2007, 11:07 PM
format_quote Originally Posted by snakelegs
for years cuba was definitely the most successful of all latin american countries. education, access to health care, elimination of poverty etc etc
of course, it used to receive massive amounts of aid from the ussr.
Like i was hearing Micheal Moore :okay: No offense of course.
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snakelegs
10-14-2007, 11:14 PM
format_quote Originally Posted by Aaron85
Like i was hearing Micheal Moore :okay: No offense of course.
don't know what you mean re: michael moore.
btw, i am not a marxist. i don't understand enough about economy to be any kind of -ist. :D
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Amadeus85
10-14-2007, 11:17 PM
format_quote Originally Posted by snakelegs
don't know what you mean re: michael moore.
btw, i am not a marxist. i don't understand enough about economy to be any kind of -ist. :D
You dont know Micheal Moore? :blind: He is the guy who made Fahrenheit 9/11 and recently he made a movie about benefits of current cuban health care and its superiority over american health care. :D
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snakelegs
10-14-2007, 11:19 PM
no, i didn't know he made one about health care in cuba.
i don't know anything about cuba in recent years, but i do know that american health care is a disgrace. :unhappy:
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Amadeus85
10-14-2007, 11:22 PM
format_quote Originally Posted by snakelegs
no, i didn't know he made one about health care in cuba.
i don't know anything about cuba in recent years, but i do know that american health care is a disgrace. :unhappy:
So listen to Moore and go to Cuba :D Ok i now it was a bad joke :-[
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Isambard
10-15-2007, 02:13 AM
PA, what I mean about interest rates isnt normative.

If you have business that arnt goverment run, and you have government spending, then youll get nastier and nastier recessions as well as increasing inflation.

The empires of old were able to skirt around this by plundering their neighbours and on the whole far less industrialized (and thus powerful) then states of today.

So then how would the Shariah state so many claim to be superior work this out? If it goes plundering, Im sure one of the many powerful nations of the world will see it as a threat and destroy it, so that leaves the economic development route. How will it deal with the very real consequences of development if the central tool to combat it is banned?

Trumble, my problem with Marx is that he was too idealistic. Thats not to say he was dumb or anything, just that he is very much a product of his time.
Check out Labour theory. It was at the core of Marxism but has been debunked pretty extensively since the days of Marx.

There is also the scernio called "Tradgity of the Commons" you may want to check out. Its a good reason to avoid communal ownership as opposed to invidual property.
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جوري
10-15-2007, 02:38 AM
format_quote Originally Posted by Isambard
PA, what I mean about interest rates isnt normative.

If you have business that arnt goverment run, and you have government spending, then youll get nastier and nastier recessions as well as increasing inflation.

The empires of old were able to skirt around this by plundering their neighbours and on the whole far less industrialized (and thus powerful) then states of today.

So then how would the Shariah state so many claim to be superior work this out? If it goes plundering, Im sure one of the many powerful nations of the world will see it as a threat and destroy it, so that leaves the economic development route. How will it deal with the very real consequences of development if the central tool to combat it is banned?

.
I don't understand why 'you'll get nastier and nastier recessions'... before you go into business governmental or otherwise some planning is in order?... The state has a right to help its individuals from state fund and from Zakat money. Individuals have the right to start a business at the same time the state shouldn't interfering with their growth. At the same time helping individuals who have nothing at all by giving provisions..

it is really a matter of management, structure and direction. further a Muslim empire with all its city states should be and would be self sufficient so as to not as you put it go 'blundering' and stealing other country's resources in fact as the west has done and continues to do to modern day in parts of Africa. Not Just politically but economically... Why do you think England, France and the rest went on excellent excursions to other parts of the world were it not in fact to rob them of their natural resources...

If a Muslim empire existed like the days of yore it would control turkey and parts of Europe (Bosnia, Albania), more than half of Africa, south east Asia, parts of china, Arabia, well into Iran and all the 'istans' to parts of Russia.. we all know that united all these parts would be very powerful and very economically stable not to mention their geographical locations and different climate would allow for all kinds of textiles, livestock and agriculture where one state fails due to whatever reason another would compensate! It won't be a matter of Thathcher's trickle down economy nor power in the hands of just an elite few.. there is no Question asked here...
it is any wonder there is a war on Islam, with such labels as 'Islamofasicm' in hopes of dismantling what is left of it?.. while we all fight amongst ourselves..... we are talking exactly one third of the world here.. I think they'll manage very well if in fact such an empire were to rise again and Ameen to that..

peace!
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NoName55
10-15-2007, 03:22 AM
according to the kafir troll shariah banking necessitates going on plunder sprees.

if that is true, does it mean, all the western countries who are on plundering campaigns at present, are covertly running on Sharia principle and only, outwardly giving impression of capitalism and usury?

if they do believe in capitalism then why are they busy exploiting/robbing other countries.

and where the hell are these so-called mods? getting sick of them allowing idiots to go around around in circles, then they wonder why I am not admiring their "dahwah" efforts.
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Isambard
10-15-2007, 03:31 AM
PA, youve given me a normative assement of what is really an is, not a should be.

How would any state without interest rates combat increasing recessions and inflation? Like what procedure would it use because if left unchecked, youll eventually get hyper-inflation which is argueable as destructive as any nuclear weapon.
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Isambard
10-15-2007, 03:37 AM
format_quote Originally Posted by NoName55
according to the kafir troll shariah banking necessitates going on plunder sprees.

if that is true, does it mean, all the western countries who are on plundering campaigns at present, are covertly running on Sharia principle and only, outwardly giving impression of capitalism and usury?

if they do believe in capitalism then why are they busy exploiting/robbing other countries.

and where the hell are these so-called mods? getting sick of them allowing idiots to go around around in circles, then they wonder why I am not admiring their "dahwah" efforts.
I see you are on another crusade to win the world over with your charm.

Forgive me for asking something that was pre-approved (and encouraged by a mod). I forgot that when one has a question about something that seems strange, its best to keep it to yourself right?

I mean the very nature of a discussion forum is to passively agree *rolls eyes*

Before you bother to respond, I suggest you educate yourself. Ive been trying to keep the discussion simply by trying to avoid some terminology and some of the concepts as Im aware not many folks have a business background, but seeing as you want to go on about how great you are, I suggest you read this before you post further.

http://en.wikipedia.org/wiki/Business_cycle
http://en.wikipedia.org/wiki/Monetary_policy
http://en.wikipedia.org/wiki/Fiscal_policy
http://en.wikipedia.org/wiki/Inflation
http://en.wikipedia.org/wiki/Hyper_inflation
http://en.wikipedia.org/wiki/Stagflation
http://en.wikipedia.org/wiki/Externalities
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NoName55
10-15-2007, 03:45 AM
no worries, I alway had my suspicion about the true nature and purpose of this site. Recently, it has been confirmed and I am certain in my my mind now so I shant be bothering any of you any more.
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جوري
10-15-2007, 03:53 AM
format_quote Originally Posted by Isambard
PA, youve given me a normative assement of what is really an is, not a should be.

How would any state without interest rates combat increasing recessions and inflation? Like what procedure would it use because if left unchecked, youll eventually get hyper-inflation which is argueable as destructive as any nuclear weapon.
I don't know --we are speaking about a supposition that is purely conjectural---I have no reason to believe that under appropriate management of such a sizeable portion there will be economic decline.. look at the south Asian market alone.. I think that can sustain the rest should there indeed be a state of a recession. I don't see a recession happening in all parts of such a large empire at once.. whatever area fails another comes to the rescue no different than on an indvidual level putting money aside for a rainy day..and when a rainy day does come you are not in a suicidal state but can in fact sustain yourself until conditions improve....
You can charge needed tariff on imports and exports etc.. I fail to see usury as a way to prevent disasters of epic proportions in fact I think quite the opposite.. it is the death of people....

I don't believe anyone has to die to sustain the whole.. that is just sick and abnormal even from the most basic value orientation!

peace!
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Keltoi
10-15-2007, 12:05 PM
Interest rates are an effective tool in the mammoth beast known as the U.S. economy, but I'm not convinced that interest rates are a must for any successful economy. It is true that hyper-inflation is a very destructive force, just look at Germany after WWI, but the problem there was too much money in the system. If an economy bases its currency on concrete value, something like gold, then the need for fiat money is lessened.
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aamirsaab
10-15-2007, 12:43 PM
:sl:
format_quote Originally Posted by Isambard

....If such a state were to exist, how would it deal with business cycles and growing inflation w/o interest rates?
As the adage goes, 'let's get down to bidness'.

Interest rate is basically an extra tax on a good. Without interest rates, prices are likely to be lower. To the customer, this means they have more disposable income. To the company, it means less profits. However, since the price per good is lower, more customers are likely to purchase. Some would argue that for products such as Fast moving consumer goods (FMCGs) such as milk/bread and various other food stuffs, the affect of price on consumers would be inconsequential. However, since the profit for the companies decreases per product, due to lack of interest, the added consumer base (even though, comparatively small) will compensate for the loss and in most cases will actually increase profits;.

e.g
Product = Bread.
Price = £0.50 (plus 10 percent interest) = £0.55
Customer base = 100

Total income = £0.55 * 100 = £55.00

Now without interest;

Price = £0.50
Customer base = 100 (Plus 10% increase due to price drop) = 110

Total income = £0.50 * 110 = £55.00

Obviously, in real life, the percentage increase in customer base is likely to increase over time. THe example was to illustrate immediate response.

Thus, with the price of the product decreasing by 10%, and the customer base increasing, the product's actual life cycle is likely to increase since more customers are purchasing it. Additionally, with this increased life cycle comes more profits - which are usually injected back into the business to either aid existing products are create new ones.

Obviously, the product's life cycle will come to an end, however the profits already obtained will help carry on the business.

Inflation
Since the price has now dropped and the consumer has more disposable income, the consumer price index (CPI) is likely to increase. This will innevitably lead to a higher price for goods, since consumers can now afford it or so one would think. Remember that the consumer now has more money to purchase OTHER goods - thus, prices are not likely to inflate since the majority of goods are all being purchased, not just the cheapest. If anything, this is likely to lead to a decrease in price since companies will be competing a helluva lot more than usual.

Though, since demand has increased, more jobs will required to ensure this demand is met, whether this be by an increase in employees per outlet or by an increase in outlets themselves (there are other ways of course) i.e. the multiplier effect. Thus, the figure for wages will have to increase since there are more employees. Obviously, this would lead to a decrease in profits - however, due to the surplass of customer (which is due to the lack of interest), the effect will not lead to bankruptcy since consumer spending per time perioud is usually more than an employees wages.

E.g.
An employee is paid £5.00 an hour; average company has 20 employees (figure varies depending on industry/type of business etc)
So in one hour that is £100 out of the profits
A consumer spends on average £15 an hour; average company has around 100 consumers.
In one hour, that equates to £1500 ----- even if the spending is lower, say £5, the customer base more than makes up for the loss since the employee:customer ratio is always going to be 1 to many.

Then, we take into account that advertising costs are minimised, since the customer base has increased considerably due to a price drop. The company therefore, has less to spend on advertising/promotion [though to be fair anyone in the advertising industry may be put out of a job] - again, this money can therefore be redirected in a number of ways - all equating to a stronger economy and all without the aid of inflation and interest, might I add.

Just simple honest business :)

format_quote Originally Posted by noname55
...and where the hell are these so-called mods? getting sick of them allowing idiots to go around around in circles, then they wonder why I am not admiring their "dahwah" efforts.
I'm sorry, I was busy having a life. In case any of the members have forgotten, the moderaters do not stay on LI all day since they have little incentive, unless of course they're sadomasachistic, and enjoy being flamed over the internet.
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Isambard
10-16-2007, 05:18 AM
format_quote Originally Posted by PurestAmbrosia
I don't understand why 'you'll get nastier and nastier recessions'... before you go into business governmental or otherwise some planning is in order?... The state has a right to help its individuals from state fund and from Zakat money. Individuals have the right to start a business at the same time the state shouldn't interfering with their growth. At the same time helping individuals who have nothing at all by giving provisions..

This has to do with the nature of the business cycle and investing of firms (which I'll address in my next post). As for the second part about right to business and hlping individuals, well that money has to come from somewhere. Depending what your political views are of which school of econ you ascribe to, the solution explination/normative assement can range wildly. For example if you are a anachrocapitalist/libertarian/ascriber to Austrian school of econ, then you would say absolutely NO government is the best way for fairness and there some articles on the Mises site that show some evidence for their claim.

On the flip-side, if you are a traditional marxist (few exist nowadays) you would agree that individual freedom and freedom of the market is the cause of evils and thus total state planning is in order.

Of course these are two extremes and there are in reality as many viewpts as there are colors to a rainbow.

it is really a matter of management, structure and direction. further a Muslim empire with all its city states should be and would be self sufficient so as to not as you put it go 'blundering' and stealing other country's resources in fact as the west has done and continues to do to modern day in parts of Africa. Not Just politically but economically... Why do you think England, France and the rest went on excellent excursions to other parts of the world were it not in fact to rob them of their natural resources...

The problem with trying to have a self-sufficient society and be powerful, is that its impossible. If you had a small pre-industrial society then it would be do-able but that wouldnt fit into the ideal superpower-Sharia -State alot of muslims tend to talk about.

So then we need to look at another example such as the former U.S.S.R. It tried to to be wholly sulfsuffient which ultimately meant controlling prices both directly and indirectly to discourage cheaper inports, subsidizing pretty much every industry for what was assumed to later produce a stable work environment and increased capitol but which only managed in promoting corruption, inefficany, and corpulensance of firms as they had gov't sanctioned monopolies and thus had no incentives to change.

Especially now, no country is self-sufficient. There is growing inter-dependance between nations as bigger and bigger consumer and labour markets are needed.

If a Muslim empire existed like the days of yore it would control turkey and parts of Europe (Bosnia, Albania), more than half of Africa, south east Asia, parts of china, Arabia, well into Iran and all the 'istans' to parts of Russia.. we all know that united all these parts would be very powerful and very economically stable not to mention their geographical locations and different climate would allow for all kinds of textiles, livestock and agriculture where one state fails due to whatever reason another would compensate! It won't be a matter of Thathcher's trickle down economy nor power in the hands of just an elite few.. there is no Question asked here...

Not necessarily. Just look at buddy nations. If one economy goes down, you'll usually get a sympathetic response in another (thou to a lesser degree). This is because of the interlink of their economies. This would be especially true in an Islamic empire as it would be very centralized to begin with so one downturn in the economy would be felt all over

it is any wonder there is a war on Islam, with such labels as 'Islamofasicm' in hopes of dismantling what is left of it?.. while we all fight amongst ourselves..... we are talking exactly one third of the world here.. I think they'll manage very well if in fact such an empire were to rise again and Ameen to that..

peace!
Well I would disagree for a number of economic and political reasons but then thats the reason of this thread :D
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Qingu
10-16-2007, 05:31 AM
I'm not an economist, but I agree that a Shariah economy would not necessarily be hindered by failing to be purely capitalistic. I think many countries have realized that pure capitalism is simply not sustainable in the long run, and as world resources grow scarce I think we are going to see more countries move towards sustainable, socialist systems that value preservation over development.

That said, I think a Shariah economy would be hindered by several factors. First, Shariah law is a theocracy and as such is basically anti-science. In order for science to function effectively, it must be allowed to ask questions which may conflict with religious teachings. For example, much of modern medicine would not be possible without the theory of evolution, which directly contradicts both the Bible and Christianity. Similarly, much of our technology—GPS satellites, advanced computers, nuclear reactors, etc.—is based on Einstein's theory of relativity, which also contradicts the Bible and Christianity.

Would people like Darwin and Einstein be given free reign to voice and develop their ideas in a Shariah society? I don't think so, and since so much of economic power is directly influenced by scientific development, I think a Shariah economy would be severely limited.

Secondly, wasn't there a big problem with taxes historically in Shariah societies? I am no expert, but I remember reading about how Muslims at the height of the caliphate encouraged kufr to not convert, so they could continue to tax them. Apparently the caliphate needed a large population of unbelievers to tax since an all-Muslim population would not be sustainable.
Reply

Qingu
10-16-2007, 05:33 AM
(by the way, when I said "the Bible and Christianity" in the above post, I meant to say "the Bible and Quran" ... I can't seem to find the edit button though!)
Reply

Isambard
10-16-2007, 05:49 AM
format_quote Originally Posted by aamirsaab
:sl:


As the adage goes, 'let's get down to bidness'.

Interest rate is basically an extra tax on a good. Without interest rates, prices are likely to be lower. To the customer, this means they have more disposable income. To the company, it means less profits. However, since the price per good is lower, more customers are likely to purchase. Some would argue that for products such as Fast moving consumer goods (FMCGs) such as milk/bread and various other food stuffs, the affect of price on consumers would be inconsequential. However, since the profit for the companies decreases per product, due to lack of interest, the added consumer base (even though, comparatively small) will compensate for the loss and in most cases will actually increase profits;.


Obviously, in real life, the percentage increase in customer base is likely to increase over time. THe example was to illustrate immediate response.

Thus, with the price of the product decreasing by 10%, and the customer base increasing, the product's actual life cycle is likely to increase since more customers are purchasing it. Additionally, with this increased life cycle comes more profits - which are usually injected back into the business to either aid existing products are create new ones.

Obviously, the product's life cycle will come to an end, however the profits already obtained will help carry on the business.

You are absolutely correct..that is if we only look at the short-term (microeconomics) :hiding:

I guess I should illustrate the business cycle which I have been avoiding cause...well...Im lazy :D

Okay, so are going to assume a closed economy where you have investors, firms, and gov't.

1. The economy is doing well, plenty of investment , firms are happy, and gov't is doing its thing (providing social services) and a high lvl of employment.
2. Although the economy has reached its potential, ppls faith in the economy is overly strong so investment starts to be based on speculation as opposed to real assests.
3. People realize they are being stupid and start pulling out their investment from the firms. Because people (and esp. business folk) are panicy and oft stupid, as more and more people pull out, theyll panic creating a cycle. This will cause a downturn in the economy as less investment means firms have to fire ppl to make ends meat thus making everything seem all the more grim.
4. Investors will stay away from investing until the economy picksup once again, but there is the paradox that unless they begin investing, then it remain in recession.


The way interest rates work, is that Gov't lowers/raises the amount of interest on the central bank on how much is loaned to other banks. Thisll then effect how banks loan money and either kick-start or slow down the economy making it essential for curbing the nasty cycles.

Inflation

Since the price has now dropped and the consumer has more disposable income, the consumer price index (CPI) is likely to increase. This will innevitably lead to a higher price for goods, since consumers can now afford it or so one would think. Remember that the consumer now has more money to purchase OTHER goods - thus, prices are not likely to inflate since the majority of goods are all being purchased, not just the cheapest. If anything, this is likely to lead to a decrease in price since companies will be competing a helluva lot more than usual.

Though, since demand has increased, more jobs will required to ensure this demand is met, whether this be by an increase in employees per outlet or by an increase in outlets themselves (there are other ways of course) i.e. the multiplier effect. Thus, the figure for wages will have to increase since there are more employees. Obviously, this would lead to a decrease in profits - however, due to the surplass of customer (which is due to the lack of interest), the effect will not lead to bankruptcy since consumer spending per time perioud is usually more than an employees wages.

EThen, we take into account that advertising costs are minimised, since the customer base has increased considerably due to a price drop. The company therefore, has less to spend on advertising/promotion [though to be fair anyone in the advertising industry may be put out of a job] - again, this money can therefore be redirected in a number of ways - all equating to a stronger economy and all without the aid of inflation and interest, might I add.

Just simple honest business :)


.
You also need to take into account gov't spending. Gov't spending would be the cause of inflation by injecting money into the economy via social programs as it increasing consumer confidence and makes them more risky which may lead to an economic bubble which can be very nasty, esp. if you have to breaks (interest rates):sunny:

PS. Good to see yaa again. Was afraid you had gotten bored and given a wave of a hand and a "meh" to this topic :giggling:
Reply

جوري
10-16-2007, 05:51 AM
To new guy-- try to use the search feature to learn about basic Quranic/Islamic facts before you write.. there is a button up on top, third from your anatomical right.. Also Evolution and the likes have been discussed here ad nauseum do read up on that too so we are not going all the way to the station to pick you up when everyone has well left the docks a good 10 hours ago...

Otherwise you'll find yourself in the midst of a heated debate, I imagine from what I have seen so far you condescending all around words get heated, then the discussions end up going no where.. we are civilized folks on this forum.. and I imagine even an Atheist will have evolved to fully human by now? so pls hold it on a level...

cheers
Reply

Qingu
10-16-2007, 06:00 AM
format_quote Originally Posted by PurestAmbrosia
To new guy-- try to use the search feature to learn about basic Quranic/Islamic facts before you write.. there is a button up on top, third from your anatomical right.. Also Evolution and the likes have been discussed here ad nauseum do read up on that too so we are not going all the way to the station to pick you up when everyone has well left the docks a good 10 hours ago...
Hm. I'm not sure what exactly you think I've misstated or misunderstood about "Quranic/Islamic facts." I understand that evolution has probably been a hot topic on this forum but I don't see how this relates to the context of my post.

Otherwise you'll find yourself in the midst of a heated debate, I imagine from what I have seen so far you condescending all around words get heated, then the discussions end up going no where.. we are civilized folks on this forum.. and I imagine even an Atheist will have evolved to fully human by now? so pls hold it on a level...
I apologize if I came off as condescending, that was not my intent.
Reply

جوري
10-16-2007, 06:03 AM
format_quote Originally Posted by Qingu
I apologize if I came off as condescending, that was not my intent.
Then go to introduce yourself section.. tell us more about you, and what your hopes are out of joining?


addendum: I just saw that you did introduce yourself ... never mind!
Reply

Joe98
10-17-2007, 06:13 AM
If a businessman in the USA needs $200million to fund a business, it is not uncommon that investment bankers and private investors get together and invest. Of course they become shareholders and share in the rewards. This is perfectly consistent with Islamic banking rules.

Sometimes you get 50,000,000 people who all have small amounts of savings and want to invest it somewhere. Around here there are organisations called Credit Unions.

They have no shareholders and all the profits are returned to the depositors. The amount of each customer’s deposit account will change over the year. With computers it becomes a simple calculation. You take the balance of the deposit and the number of days and split the profits proportionally among the depositors. It is not interest, it is profit and again is consistent with Islamic banking rules.

Of course the Credit Union would invest in the $200million business above.

However, 10,000,000 people would like to borrow to buy a house. There are no investment bankers who will invest in a suburban house. So the Credit Union lends the money. In the West the price of money is called “interest”. The people want to live there and will never sell. How can a Sharia bank become a shareholder and share in the rewards??????
Reply

Joe98
10-17-2007, 06:14 AM
format_quote Originally Posted by PurestAmbrosia
... during the prophet's time a lady named Hind took from state funds to start her own business.. there is nothing stopping anyone from doing so.
It’s interesting you said "took" instead of 'borrowed". What’s important is whether or not it was repaid. And was she charged a fee????



format_quote Originally Posted by PurestAmbrosia
... there is nothing stopping anyone from doing so.

Fabulous! I want $10,000,000 please!
Reply

Joe98
10-17-2007, 06:17 AM
format_quote Originally Posted by PurestAmbrosia
…..perhaps you can tell us where the advantage is of imposing ridiculous interests at rates of 22% and higher pay their visas with their master cards and eventually falling behind……
I can tell you. :sunny:

The banks used to have strict credit policies. They found this expensive to administer so they no longer do so. If the bank has 100 customers:

- 87 will fully repay their credit cards each month and pay no interest.

- 9 will pay some principal and some interest

- 4 will initially make some payment of principal and interest and then stop paying altogether.

Where the bank loses a principal amount they need to get it back. As you can see very few customers actually pay interest. As a result the interest rate needs to be very high so that the interest collected covers the amount of principal lost.
Reply

Joe98
10-17-2007, 06:19 AM
format_quote Originally Posted by aamirsaab
e.g
Product = Bread.
Price = £0.50 (plus 10 percent interest) = £0.55
Customer base = 100

Total income = £0.55 * 100 = £55.00

Now without interest;

Price = £0.50
Customer base = 100 (Plus 10% increase due to price drop) = 110

Total income = £0.50 * 110 = £55.00

Sharia charges fees. The Banks charges interest. $10 is $10 what ever label you give it.

Where I live, bakeries don’t lend money nor charge interest.
-
Reply

جوري
10-17-2007, 07:03 AM
format_quote Originally Posted by Joe98
It’s interesting you said "took" instead of 'borrowed". What’s important is whether or not it was repaid. And was she charged a fee????
I want $10,000,000 please!
No, that is what state fund is for, for its citizens to sponsor growth or to help out people in need.. there are parts of the world that still do that, where they still 'reward' people for having children or getting married.

When my mom got married she got a monetary gift.
Also many people who pay obligatory zakat assign their money to a particular charity as opposed to just random.. so some may give it toward those getting married. or to children's hospital or whatever.. state should sponsor its citizens, not make living unbearable..
Just today I saw a report about how it is becoming impossible for middle class families to make ends meet...

Life is difficult state should help not bleed you some more.

I think charging 22% interest should be considered a capital crime.. but that is just me.. Do these banks honestly think someone is going to want to pay $4000 for $18000 when they can barely make minmum payment? that is to say, it is principal owed and they won't make any new purchases... or do you think this person is going to feel crippled and probably file bankruptcy where the bank won't get $1000 or even $150....

Someone needs to think about this so the national debt doesn't rise to a billion a day...

Either way as I have said prior my understanding of economics lacks maturity.. but I don't think I need to be einstein to figure out how interest simply won't work....least of which to the struggling people who probably need the money most....
Reply

aamirsaab
10-17-2007, 12:33 PM
:sl:
format_quote Originally Posted by Isambard
1. The economy is doing well, plenty of investment , firms are happy, and gov't is doing its thing (providing social services) and a high lvl of employment.
2. Although the economy has reached its potential, ppls faith in the economy is overly strong so investment starts to be based on speculation as opposed to real assests.
3. People realize they are being stupid and start pulling out their investment from the firms. Because people (and esp. business folk) are panicy and oft stupid, as more and more people pull out, theyll panic creating a cycle. This will cause a downturn in the economy as less investment means firms have to fire ppl to make ends meat thus making everything seem all the more grim.
4. Investors will stay away from investing until the economy picksup once again, but there is the paradox that unless they begin investing, then it remain in recession
Isn't that what happend with the wallstreet crash? In any case, that would only occur if the country did not export, since outsiders are just as valuable stakeholders as insiders.

format_quote Originally Posted by Isambard
You also need to take into account gov't spending. Gov't spending would be the cause of inflation by injecting money into the economy via social programs as it increasing consumer confidence and makes them more risky which may lead to an economic bubble which can be very nasty, esp. if you have to breaks (interest rates):sunny:
Ok dokily. Let's say in the previous example, inflation did occur. This would lead to a price increase, the value of the money has risen AND people have in general more money. Prices rise = leads to less disposable income. However, more demand, thus more jobs, thus more wages etc etc. Cycle continues.

Now we move onto importing and exporting - if you know of a country that has a reasonably strong economy, you're going to want a piece of that pie. Mighty Nice Pie. If you didn't, it would lead to another wallstreet crash, which the West, in general, hasn't experienced for some time mainly because they HAVE been exporting/importing :).

So other countries start investing via import/export - the value of the initial country's currency is going to shoot through the roof, since more people are using - economy is now pretty good on a global scale.

The main drawback of using sharia, in terms of business, is that the overall salary figures are going to vary little i.e. instead of average salary boundries 5 - 50 thousand annual salary, it is more likely to be around 15-30 K, simply because companies won't be making Super-sized profits so technically there is less to 'give away'. That being said though, the job prospects and the fact that there is more disposable income allows the lower end salary barrier to be much higher. Essentially, you'd no longer be keeping the rich richer and the poor poorer. It'd be around the middle for the large majority of people.

However, I do readily accept that since the nature of society nowadays is now dominated by greed and consumerism, they'd most likely not take sharia business principles and instead use the existing method. I guess since the exisiting system is so well established, on a global scale, changing it would constantly be met with challenge simply because humans are not after what is equal. Heck, If they were, we'd probably be under communism...:p

PS. Good to see yaa again. Was afraid you had gotten bored and given a wave of a hand and a "meh" to this topic :giggling:
Hahaha. It's been some time since I've had an intelligent/academic discussion on the internet (apart from the previous one with you on the psychology thread), so I try and take the oppurtunities as they come - the internet, in general, is populated by the uneducated (just look at the comments on youtube!) - I get lonely and bored from time to time :'( .
Reply

Isambard
10-18-2007, 04:33 AM
format_quote Originally Posted by aamirsaab
:sl:

Isn't that what happend with the wallstreet crash? In any case, that would only occur if the country did not export, since outsiders are just as valuable stakeholders as insiders.

That it is....kinda..haha. Bit of a complex subject but yes, it was a cause. Its called a bubble when you are producing beyond what you should be.

Keynes identified the problem and wrote solution to it called Fiscal and monetary policies which the former involves interest rates.

You could get away by having outsiders, but it would very risky to leave complete stability of your economy in the hands of what may happen in foreign markets as you ahve no control. Just one foreign war, or one famine in a wrong place and you're economy plunges into a toilet. Interest rates are much safer :D

Ok dokily. Let's say in the previous example, inflation did occur. This would lead to a price increase, the value of the money has risen AND people have in general more money. Prices rise = leads to less disposable income. However, more demand, thus more jobs, thus more wages etc etc. Cycle continues.

Thats only if you have economic progress with inflation and if the progress is greater than inevitable inflation. Simple gov't spending w/o method of control will lead to a greater output in inflation in the longrun and inflation itself simply means depretiates the value of money hence why you need more of it to purchase something. Your "real money" is lessened for every upward movement in inflation/money ration.

The cycle is downward :-\

Now we move onto importing and exporting - if you know of a country that has a reasonably strong economy, you're going to want a piece of that pie. Mighty Nice Pie. If you didn't, it would lead to another wallstreet crash, which the West, in general, hasn't experienced for some time mainly because they HAVE been exporting/importing :).

So other countries start investing via import/export - the value of the initial country's currency is going to shoot through the roof, since more people are using - economy is now pretty good on a global scale.

This is true, but I would argue that the diversity of the "ideal shariah state" would ensure that if any did form, it would be hardly consentual and only because on group has the most power meaning rivals would make the political arena within the country unstable thus financially unappealing for foreign investment. But that falls into politics so best to avoid here as we are dealing with ideals (everyone agreeing) hehe.

The main drawback of using sharia, in terms of business, is that the overall salary figures are going to vary little i.e. instead of average salary boundries 5 - 50 thousand annual salary, it is more likely to be around 15-30 K, simply because companies won't be making Super-sized profits so technically there is less to 'give away'. That being said though, the job prospects and the fact that there is more disposable income allows the lower end salary barrier to be much higher. Essentially, you'd no longer be keeping the rich richer and the poor poorer. It'd be around the middle for the large majority of people.

However, I do readily accept that since the nature of society nowadays is now dominated by greed and consumerism, they'd most likely not take sharia business principles and instead use the existing method. I guess since the exisiting system is so well established, on a global scale, changing it would constantly be met with challenge simply because humans are not after what is equal. Heck, If they were, we'd probably be under communism...:p

Well the system that you mention with lesser inequality has been implemented to varying degrees in some European business models (ie Germany) and Japan had a strong tradition of it as well.

You are correct that greed is a main reason for the switch to the American model of business but there is also the strange change in status quo on the background economic noise, that is, prior to the 70s, an event such as Stagflation was seen as a logical impossibility (as raising inflation with raising unemployment makes no sense on the surface) in which case the Keynesian state would be ideal, and was until the 'impossibile' not only became possibile, but it became the norm!

I personally cant tell you why, but something that was a freak of economics is now standard in countries that practise re-distribution of wealth and increases with the more re-distribution leading many politcians and economists to turn toward the uglier, more unfair neo-liberal approach which is greed-centered.

Hahaha. It's been some time since I've had an intelligent/academic discussion on the internet (apart from the previous one with you on the psychology thread), so I try and take the oppurtunities as they come - the internet, in general, is populated by the uneducated (just look at the comments on youtube!) - I get lonely and bored from time to time :'( .
Hehe Youtube? Cmon now! Getting irritated that you cant find any intellegent convos youtube comments is like going to a dingy alley downtown and being surprised the bums smell :p

haha
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