In the following lines, assertions related to Islam are
based on the interpretation of the Qur’ān and the Sunnah and on the ensuing
spirit of this religion.
I Regarding Islam
1. Islam has not given any economic system. In fact,
it has not given any social system. A system is essentially a set or assemblage
of interconnected and interdependent things that form a complex unity. If Islam
had given social systems in that sense it would have been obsolete long ago. It
has however given certain universal ethical principles for the purification of
human soul.
2. In the case of vices which have pervaded society
to the extent that their eradication in one stroke can only cause greater
disruption and evil than the one which is sought to be rooted out, Islam has
always had a gradual approach towards implementation (for example, its gradual
prohibition of intoxicants during the Prophet’s time -- sws)
3. Islam does not take away the freedom of an
individual to own and use wealth. Only in exceptional cases, where the chances
of exploitation are great, does it take away the right to ‘use’ wealth. Also,
it acknowledges the fact that there are natural differences among humans in
relation to their abilities, circumstances and wealth. These differences create
a harmonious society if each individual is given a fair and just opportunity to utilise his or her potential. Islam restrains the freedom of an individual
seeking his or her material benefit only to the extent that there is no
exploitation and that the collective and personal activities of an individual do
not hinder his or her soul’s purification, which purification is essential for
enabling an individual to become a true servant of God. Purification of human
soul is the underlying spirit of injunctions as the prohibition of Ribā and of
directives as the implementation of Zakāh.
II Regarding Economics
1. There is no viable basis for institutional credit
creation -- the primary function of banks -- apart from interest. If there had
been, someone would have found it by now. The Jews tried it, the Christians
tried it, the Muslims tried it. All failed. It’s time we started looking for an
alternative solution rather than wasting further efforts on looking for
alternatives to interest as a basis for institutional credit creation. Perhaps,
the solution lies in looking for a banking-free economy rather than in looking
for an interest-free banking system. A radical idea perhaps, but one that needs
looking into, especially since preserving the existing structure of banking is
not a Divine commandment.
2. Since, as Paul Samuelson has put it ‘A thing is
worth what people think it is worth’, values can have the profoundest economic
impact. In the promotion and preservation of any value, the affluent and the
elite who are at the helm of affairs have a great role to play. It is not only
through laws but also through personal example that values are inculcated. That
is why it used to be a convention in true Islamic societies that a ruler’s
standard of living never went above that of an average person.
3. An economic system does not exist in isolation.
Any successful economic guideline requires certain accompanying factors in the
political, legal, social and cultural set-ups shaping the economy.
III Recommendations
The economy should be re-structured on the bases of a just
distribution of wealth and self-reliance in such a manner that gradually the
government is left with no need to impose any tax on its citizens others than
Zakāh.
Details of this suggestion, which is based on the ideas of
Javed Ahmad Ghamidi, are presented by Shehzad Saleem in the next appendix.
While considering these suggestions in relation to budget making, the following
points must also be considered:
1. Usually, policy makers in our country think of
only one way of reducing the gap between revenue and expenditure: increasing the
revenue -- which is generally done through additional borrowing or increased
taxation or both. Yet, another way has always been there: reducing the
expenditure -- the wrong kind of expenditure. Expenditure which eats up the
stock of capital goods more quickly than it adds to it or leads to such patterns
of production and distribution as make the rich richer at the cost of the
development of the rest certainly needs to be curtailed. Changing the structure
of expenditure requires courage, commitment and sagacity. But it can be done.
At the moment, the greatest curse our nation is
facing is debt-servicing. Domestic debt servicing alone is around 60% of the
total debt servicing in the revenue account. If the government, by taking the
masses into confidence, musters up enough political support to get the majority
vote on this one, it can declare a moratorium on the payment of domestic debt
on the basis of the Qur’ānic verse which urges a lender to extend the time of
ease for a borrower in straitened circumstances. All interest payment on
domestic debt can immediately be stopped on the grounds of interest being
un-Islamic. The current value of debt may be linked to gold and re-payment
assured on that basis so that no panic results. The facility of sale (through
the Exchange) of marketable instruments of this debt may continue. The
time-period for re-payment in gold (or value thereof) may be delayed for at
least 15 years so that ample time is available for generating income by using
the saved funds for productive and developmental enterprise. With this one
stroke, the largest chunk of expenditure can be dealt with. All other
superfluous expenditures must also be curtailed or stopped.
2. Zakāh is usually thought of as a very
narrowly-based tax. This tax, with its inherent appeal of being an obligatory
ritual of worship for a Muslim, has a very wide base (as is explained ahead) and
can be used for all collective and state purposes. In this regard, the condition
of Tamlīk imposed by some jurists, which restricts the use of Zakāh to personal
possession at the level of individuals who belong to the destitute class, has no
basis in the Qur’ān or Sunnah. It is suggested that this tax be used to the
fullest extent to broaden the base of taxation, especially by including
agricultural produce in real terms.
3. Since the government has the right to take away
the right of use from incompetent owners of wealth so that exploitation in
society is checked, it should look into the possibility of sharing in the
management of large, under-utilised tracts of agricultural lands. Some
suggestions in this regard follow in the next appendix.
4. The financial system should be restructured in
such a way that interest is abolished and indigenous entrepreneurship,
especially at the middle-income levels and at the levels of cottage industry, is
encouraged. (See the first suggestion in the next appendix for how this
restructuring may actually be done).
5. Further foreign loans should not be taken. Efforts
should be made to retire all foreign debt in the next 15 years. Superfluous
expenditure must be put to an end, the government and its members should promote
austerity by personal example, and the more well-off segments of society should
take the lead in making the dream of full retirement of debt a reality. Had the
present government been a true leadership of the masses rather than of the
affluent and of the industrial bourgeoisie, one might even have suggested some
drastic measures for the retirement of debt, considering the gravity of the
situation. These drastic measures would have included among many others,
redistribution or acquisition of land on the basis of original ownership before
the British took control from the Muslim rulers of India and acquisition of or
sharing in the management of enterprises set up in the private sector through
funds borrowed from the State controlled banks and DFI’s. (Alternatively, a
system of Khirāj as suggested in the next appendix could be used for ‘less
drastic’ measures).
The unhallowed hand of this scribe presents these
suggestions with full awareness that in all probability the rulers of today will
rather choose to ignore them. But since there is hope in the younger generation,
these suggestions it must present. Perhaps, the rulers of the future will pay
heed to them in a time when there is no difference between making money and
making goods, when the man who makes most money is no longer one who exploits
others or stifles indigenous enterprise with his interest-based business
expansion and cut-throat competition or who, with his speculation and
interest-based business activity, creates for small investors, entrepreneurs and
for the majority of people in society problems as panics, industrial failures
and unemployment.
But until then, until darkness gives way to that daylight,
it seems that the worship of avarice, interest and precaution as gods will
continue in nations as ours.
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