The current economic system

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Crystal

Crystal

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Hey all again ,

I study about the economic and political system in college however I am no expert on economics. I understand that Islam can be as much political as it can be religious.
My question to Muslims is this - currently the economic system of the world is ruled by capitalist ideology. Does Islam agree with this? Does Islam have alternative views on how the system should work? And finally does Islam have any contributions to solutions for the current financial crisis?

Thanks.
 
As much as I would like to answer your question I'm afraid I don't know :hmm: inshaAllah someone else will.
 
Own/hold capitals is permissible for Muslims, even Muslim scholars often motivate people to being rich and own capitals because rich people who own capitals can help other people. In example, they can establish business companies and employ other people.

However, Muslims believe, everything in the world is belong to Allah, and human are only the managers. So, Muslims are not allowed to use their capitals to do something wrong like exploit other people, or use capitals as bargain power to push govt to issue a policy that gives unilateral benefits for them, etc.

Okay, I will log out. It's my time to work as micro capitalist who employ several employee. :D
 
There are two main differences between Islamic economics and capitalism. Interest is forbidden in Islam unlike capitalism. Muslims believe resources are not limited while western economists believe the world has limited resources.

I'm not going to discuss this further because I'm still learning about this.
 
Tragic Typos said:
Muslims believe resources are not limited while western economists believe the world has limited resources.
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Which resource that you mean ?. Nature resources ? human resource ?. Muslims know oil will run out, Muslims know solar (sun ray) is unlimited, Muslims know human resource is limited in number but with ability optimization 10 men can be better than 20.
 
ardianto said:
Which resource that you mean ?. Nature resources ? human resource ?. Muslims know oil will run out, Muslims know solar (sun ray) is unlimited, Muslims know human resource is limited in number but with ability optimization 10 men can be better than 20.
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All forms of resources like cotton and coal. Anything that is used to make goods and provide services. Some forms of resources are renewable but need time, so will be considered limited. I remember reading an article about tuna fish. Some institute claimed that tuna fish was being consumed to the extent of extinction due to its' high demand and these species need time to reproduce.
 
Tragic Typos said:
Muslims believe resources are not limited while western economists believe the world has limited resources.
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I think this is too broad.
In totality yes, muslims believe that there's always resources to provide (provision or rizq), but I disagree that muslims believe that each resource is not limited.

So for example: energy. Muslims believe that there's always energy resources to fulfill human needs, so for example, when oil runs out, there's always something else that will be able to replace oil as the main source of energy.

I haven't yet to read in Qur'an or ahadeeth the works by scholars that say each particular resource is unlimited.
 
Crystal said:
Hey all again ,

I study about the economic and political system in college however I am no expert on economics. I understand that Islam can be as much political as it can be religious.
My question to Muslims is this - currently the economic system of the world is ruled by capitalist ideology. Does Islam agree with this? Does Islam have alternative views on how the system should work? And finally does Islam have any contributions to solutions for the current financial crisis?

Thanks.
Click to expand...
Capitalism actually has it's roots in Islam. But, due to several Islamic principles there is no real concept of globalisation and capitalism on such a grand scale that we see in today's world. For example, we are not allowed to sell at extortionate prices (can't sell a pen for £1000 if the market value is only £0.10), nor are we allowed to form monopolies. So Islam does agree with Capitalism, but it's sort of semi controlled (mainly through ethics and if needs be government interference).

Generally speaking, Islamic economics = free market. In theory, that system works so long as everyone is playing by the same set of rules (no riba/interest, no monopolies, no extortion etc) and of course if the market is stable (if not, then government intervention is required, but this is all extra stuff tbh so you can ignore it if you want)

In terms of how Islamic principles can help current financial crisis:
1) By following Islamic economics in the first place, we wouldn't be in this mess (banks and Financial institutions would be working a lot more ethically and far less greedily. External symptoms like the house price crash may still have occured [as this is down to the condition of the markets, and not necessarily the fault of banks' behavior], but we wouldn't for example be selling NINJA loans etc)

2) There is no quick fix for the current financial crisis. Islamic economics cannot magically cure financial problems. But, if you play by Islam's set of rules (regarding banking etc), it will cure the current financial problems faster, and more effectively than by using non-islamic methods - simply because banks and FI's would be acting ethically and morally.

In a nutshell: Islamic economics = driven by ethics. Modern economics = driven by profit. It's a difference in ideology - once you understand that, the rest should fall into place.


Hope that helps.
 
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I asked a friend and he told me this

Islam does not agree with the capitalist system as it is based on interest on money, production of fake money and markets of cheating.

Yes Islam has an alternative that was established for more than 10 centuries successfully.

Money has to have its intrinsic value in itself. Printing money that is not fully backed up by a tangible durable commodity is cheating. This cheating yields in people's paychecks losing their buying power as the currency devalues due to mass injection of currency in the market.

The banking system based on interest has to be abolished and the main means of dealing in a Muslim state is cash based. Good loans (Qardh Hasan) is when people lend each other for the sake of Allah when it is needed. Interest system further devalues the money as it produces interest value in the economy that has come out of thin air, again causing devaluation of currency and widening the gap between the poor and the rich.

In addition to the great benefit of Zakat being designed to help the poor and make the wealth circulate in the community, it also encourages people to invest their money in profit yielding projects rather than keeping their wealth idle, losing 2.5% every year. This promotes healthy investments and proper development of the community.

Stocks in a Muslim market must be traded by their book value and not by market speculation (gambling) as is happening today. The price of the stock should reflect the assets and the profit of the company rather than how the stocks are traded on the fake stock markets of today.

About 80% of investments today go in gambling in those markets and only 20% goes in real physical projects that benefit the economy. This is not acceptable in Islam.

Government in a Muslim state is not allowed to intervene and control prices of commodities, the market is 100% free market. Government only intervenes to control any cheating and monopoly that is committed by greedy merchants.

Finally, Allah is never removed from either the political and economical equation. The power of faith, Tawhid, total submission and duaa is essential in improving the status of the Muslim state. Allah subhanahu wa ta'alaa helps the ones sincere and supporting of Him to overcome all their problems as He has done that in the past when Muslims supported Him.
 
Salahudeen said:
Yes Islam has an alternative that was established for more than 10 centuries successfully.
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Hi , would the Ottoman Empire be the last time Islamic economics was implemented properly?

Also Ramadhan that link you gave, it talks about Zakat which I think is a good idea. I am interested in knowing how a person is assessed to pay Zakat - like it says by their income but is their a certain figure? Is zakat similar to what people pay today as tax?

I personally don't agree with capitalism but I also don't see it ending anytime soon unless another good alternative challenges it. Communism failed in challenging it. I am not aware of Muslim countries coming together on this issue - do any of you think it would be a good idea for Muslim countries to unite on economic issues like the way the EU has formed trade agreements within it's area - this could be possibly good for the Muslim world in working in their own system with each other?

Also I would appreciate if anyone else has any resources about Islamic economic system as I would like to learn about it more in depth.
Thanks.
 
the economic system of today is based on riba. Riba is not good. i've some vids but can't posten them till i reach 50 posts. So, Insha'Allah soon:D
 
:sl:

All I have to say is, as long as it's not socialism or Communism, I'm OK with it.

;D
 
If you maintain that interest is haraam in every possible circumstance, then, via qiyas, you can easily deduce that all kinds of capital gains are haraam. Which throws capitalism out of the window directly.

Leaving us with the choice between a classical centrally planned Communist economy and anarcho-syndicalism ;D
 
Futuwwa said:
If you maintain that interest is haraam in every possible circumstance, then, via qiyas, you can easily deduce that all kinds of capital gains are haraam. Which throws capitalism out of the window directly.
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Who says all kinds of capital gains are haraam?

Trading is very much encouraged in Islam, and selling at profits of real products is allowed in Islam.
Capital gains from real estate is allowed in Islam. By qiyas, capital gains from equity is also halal.

NO, Islam does not throw capitalism out of the window directly.

Futuwwa said:
Leaving us with the choice between a classical centrally planned Communist economy and anarcho-syndicalism
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Read again my post #8 and you'll be able to understand the fundamentals of Islamic economic system.
 
Ramadhan could you answer my previous question about how zakat is assessed thanks.
 
I am not very knowledgeable in how to asses zakat, but someone please correct me if i'm wrong, zakah is payable at the end of Hijrian calendar if one has more than 85 grams of gold or 595 grams of silver or articles of trade and must pay a minimum of 2.5%.
zakah is only taxable on the assets that are acquired to generate wealth (eg. cash/personal income, livestocks, savings, rental income, crops, investments such as gold and securities that may appreciate in value). Fixed assets such as buildings are exempted if they are not "in circulation".
Zakah is only payable on those net minimum (85 grs of gold and other assets equivalent in value) after basic necessities, family expenses, due credits, donations, and taxes are paid for.

Also, the above is how to calculate zakah maal (zakah on wealth), as there is another type of zakah, which is zakah fitr which must be paid by every muslim regardless of age, status or wealth if they can afford to pay 2.5/3 kgs of staple food, which must be paid between 1 ramadan and 1 syawal.
 
Greetings and peace be with you Crystal;

If we put God first, our neighbours second and ourselves last, we leave ourselves open to exploitation, and the capitalist society knows and thrives on this knowledge.

If you disagree with capitalism you might sign this petition

Dear friends

Thousands of Americans have non-violently occupied Wall St -- an epicentre of global financial power and corruption. They are the latest ray of light in a new movement for social justice that is spreading like wildfire from Madrid to Jerusalem to 146 other cities and counting, but they need our help to succeed.

As working families pay the bill for a financial crisis caused by corrupt elites, the protesters are calling for real democracy, social justice and anti-corruption. But they are under severe pressure from authorities, and some media are dismissing them as fringe groups. If millions of us from across the world stand with them, we'll boost their resolve and show the media and leaders that the protests are part of a massive mainstream movement for change.

This year could be our century's 1968, but to succeed it must be a movement of all citizens, from every walk of life. Click to join the call for real democracy -- a giant live counter of every one of us who signs the petition will be erected in the centre of the occupation in New York, and live webcasted on the petition page:

http://www.avaaz.org/en/the_world_vs_wall_st/?cl=1307584415&v=10603
Click to expand...

In the spirit of praying for justice for all people

Eric
 
Alhamdulillah Islam is the only religion and way of life that provide guidelines on how to avoid economic and financial disasters, in addition to "have faith in, love, fear and hope from God" etc.

Other religions and faith rely only on "love your god".
 

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