Summary: Islamic Economics and Capitalism

Summary: Islamic Economics and Capitalism

•Islamic economics is a Saudi project (Nejatuallh, Khurshid, Chapra, were Saudi employees.

.Islamic economics legitimises capitalist ethics and institutions. Islamic economists work within the neo classical paradigm. Policies are justified in terms of utility/profit maximization within Islamic constraints but these constraints are seen as necessary for maximizing long run utility/profit Islamic economists are rule utilitarians.

•Islamic economics endorses acquisitiveness/competition and criticizes capitalism for not achieving a balance between freedom and equality. Islam is seen as a means for reforming capitalism through introduction of Zakat and Sharia compliant financial contracts. This can co-opt Islamic, movements into liberal capitalist regimes. Islamic economics legitimizes abandonment of the revolutionary struggle to overthrow capitalism.

•The economic agenda of the Islamic parties has become indistinguishable from that of liberal and social democratic parties. This agenda does not recognize that the sahaba did not seek profit or utility maximization. Islamic policy subordinates economic to spiritual ends, zuhd, tawakkal and Faqr are strongly emphasized by Islam.

•Islamic conception of justice (unlike Rawls) does not recognize all moral ends as of equal value. Ends are not authenticated with reference to self determination but in terms of the promotion of religiously sanctioned virtues. Economic institutions and practices are valued on this basis and not on the basis of utility/profit maximization. Islamic economics cannot do this for it’s methodology is incapable of explaining the relationship between institutional structure, individual motivation and value change as it is committed to utility/profit maximization.

•Islamization of capitalist values and institutions is reflected in Taqi Usmani’s work.
• Smithian roots of Usmani’s work reflected in acceptance of:
. Scarcity and unlimitedness of wants
. Natural law (i.e. laws of demand and supply)
. Social interests are served by individuals seeking self interest
. Values should be determined on the basis of individual preferences
. “Basic philosophy underlying capitalism is correct”
. Only criticizes monopoly

• According to Usmani Islam does not possess an economic system. Preferences
should be taken as given. Shariah does not require man to have specific
preferences.

• Usmani legitimizes the capitalist property form
. Corporate personality and limited liability is justified
. Share trading, (the value of the shares are expected to be equal to the value
of the assets of the company) is also justified
. Dealing in shares of company involved in Riba transactions is legitimized.
. Accepting riba based dividends is justified
. Speculative transactions on a spot basis whatever the motive of the trade are
permissible.

•Usmani does not suggest the abolition of the money market but seeks to show that interest free banks can work in an interest based system Citi, World Bank/IMF support this stance.

•Such an approach distorts capitalist reality. Capitalism has not evolved spontaneously but through the violent seizure of power by evil men.

.This approach accepts natural laws and natural law philosophy. Imam Ghazali shows there are no natural laws – only laws revealed by God or laws made by man. Laws of demand/supply not natural Markets do not produce equilibrium (Chaos theory) capitalism promotes avarice/jealousy.

•Accepting wants as unlimited is rejecting spirituality.
•Islamic economics legitimizes Islamic subordination to global capital. It is legitimizing capitalist property growth in the Muslim world and submergence of the Muslim world within global capitalism.

•Islamic economics legitimizes avarice/covetousness and fails to recognize that price formation in markets dominated by avarice/jealousy is necessarily oligopolistic administered by a handful of companies.

•By advising multinational firms/banks Ulema are justifying Maulim subordination to imperialist finance and to the public order of global capital – i.e. America.

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