Islam And CapitalismEssay Preview: Islam And CapitalismReport this essayCasey ORourkeHistory of Arabs9-28-06Capitalism and Islamic EconomicsSitting at a train station one evening while biding my time until I could bide some more time on the slow train back west, two Muslim men kneeled down near me to pray. These two men of the Quran wore beards and their traditional clothing, a site I had grown accustomed to during my brief stay in Istanbul, but during the middle of their prayers one man stopped to answer and talk on his cell phone for several minutes. I did not mean to pass judgment on the man but I could not help but see the clash of two worlds represented in this man. The differences of nations have become more and more apparent as the many countries of the world grow more and more interdependent on each other. Pushing this globalization forward at the rapid pace we see today are the efforts of capitalism and its insatiable appetite for larger markets. This effort being aggressively pursued has not only brought Coca-Cola and McDonalds to almost every corner of the world, but also the very idea of capitalism and the values inherent in it. Due to this, the confrontations of ideas and values have sharply revealed themselves and one of the most visible of these clashes has occurred in the Middle East. Islam, the dominant religion of the Middle East, prescribes a much more different way of life. Nations already struggling to create an economy that is in harmony with Islamic tenets are now being faced with the external pressure of globalization. All too often this meeting of different cultures has been characterized as a battle, with our respective ways of life hanging in the balance, capitalism versus “Islamo-fascism” or some other misleading titles that limit debate on the real issues. Yet while the two may seem to differ at a fundamental economic level, they also share much in common that is all too often ignored. In examining this clash of cultures we should also search to see where they blend together if we are to take any further steps of finding a solution.
There are few religions that encompass the lives of its followers more than Islam. From its very beginning with Muhammad, Islam was to be more than just a religion existing under the state; it was to be the state. Its tenets are to be pervasive in all aspects of life and the ideal society is one that is in harmony with Sharia or Islamic law. Sharia is derived primarily from four sources which the major schools of thought in Islam have come to accept: the Quran, Sunna (the tradition of the Prophet), Ijma (consensus) and Qiyas (analogous reasoning). The Shiites substitute qiyas with aql (reason) [Nomani & Rahnema 2].
Keeping to a simple analysis of these four sources we can come to see the Quran and Sunna (referred to as the Hadiths when taken as a whole) are primary sources of Sharia that are set in stone but the last two (secondary sources) allow for some human discretion. The Quran and the Hadiths “safeguard the continuity and permanence of certain immutable principles” while Ijma and Qiyas (Aql for the Shiites) “can constitute an endogenous self-adjusting mechanism which enables the legal system to adopt change” [ibid. 19].It is true that different schools of thought in Islam argue over the value of such secondary sources relative to the primary sources, but the very existence of this debate suggests a religion that is searching for ways to meet new challenges whether it is through adjustments or searching for answers in the Quran or hadiths.
In Part I of the Quran the 21st verse states: “O mankind! Worship your Lord (Allah), Who created you and those who were before you so that you may be Al-Muttaqǔn (the pious)” [:21] This is the basic tenet of any religion, to have the earnest wish to fulfill the will of God. “There exists a consensus among Islamic jurists and social scientists” that social justice is “one of Islams distinguishing features” [Nomani & Rahnema 60]. This pursuit for social justice forms part of the foundation for an Islamic economy and its effects can be seen in many modern day Muslim nations and banks. Riba, or usury, is categorically banned under Islam. “O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury) (from now onward), if you are (really) believers” [2:278]. The usage of the word “usury” and its meaning is in itself a source of controversy but it has led to a ban on interest in modern day Islamic banking (although many critics doubt the reality of this ). This ban is meant to protect people from become slaves to debt by prohibiting it to grow.
Zakat is another important aspect of an Islamic economy. One should “give his wealth, in spite of love for it, to the kinsfolk, to the orphans, and to the poor who beg, and to the wayfarer, and to those who ask, and to set slaves free, and offer the prayers perfectly, and gives the Zakat Such are the people of the truth and they are the Al- Muttaqǔn (pious)” [2:17]. Zakat is essentially a tax on wealth and the “rate varies between 2.5 and 20 percent, depending on the source and conditions of production” [Kuran 19]. Zakat is one of the five pillars of Islam and it is meant to serve as a tool to redistribute wealth.
While there are many more aspects and factors involved shaping an Islamic economy, these two distinguishing examples give a general feel for how it might be guided given the importance of social justice in Islam. Having gone over some of the distinguishing aspects of the ideal Islamic economy, we are able to observe that the ideals of Islam are not so radically different from our own at a certain level. There is no doubt most people in the world desire social justice and prosperity, but it can be said that recent history is a record of the many different “hows” of attaining these things. These attempts are where cultures seem to diverge.
For the west the means of attaining these ideals have found their roots in laissez-faire capitalism. It celebrates economic freedom of the individual to makes his or her own financial choices, which will give them the power to succeed. The freedom of all will create dynamic relationships that will give everyone what they duly deserve for their efforts, and this in our eyes is social justice. If people fall behind, we will assist them to a certain degree, but to give all our will by means of charity and welfare to such problems is seen as undermining the system by limiting the freedom of others through taxes, which will ultimately lead to the dragging of more behind. Our faith in the invisible hand of the market
The central point of Hayek’s defense of free will in the post-communist period is that while the social contract has traditionally been an institution in which individuals are obliged to be responsible for their own happiness and for other people’s needs by any means necessary, so is the contract a true law of nature?
It looks like the answer to this question for both economic freedom and social democratic values is neither. Rather we have a political system where government, with its vast political power, is the ultimate arbiter, and government power is ultimately the master, not the judge. To hold this in the hands of one is to become a capitalist.
In the post-communist period, both social and economic freedom were, by and large, seen as central in the democratic values of the day. This is why we have all seen and felt it when the Soviet Union collapsed in 1991. At the time, many were convinced that communist power was not about the people, but about the government, and thus they thought that the Communist Party was on a collision course with the state. But the USSR collapsed, and the capitalist countries that followed became independent countries. The people were also left behind, as was the state, but the regime remained strong, and the market economy flourished, and the private ownership was abolished. The capitalist countries were now free to form private communities that were sovereign to the private members who had contributed. This same dynamic of free social enterprise, by definition, continues today; there are a bunch of small socialist-communist groups that actually organize for self-management in any given situation; there exist such groups as Democracy for Socialism, the Socialist Workers’ Network for Peace, and the Social-Democrats of China.
In this sense, Hayek was right about the importance of political control. In his view political power was in an absolute sense nothing but the most powerful force. If everything was subject to the will of society, everything is subject to the will of the market, and everything is subject to the will of the individual, and if he decides to spend money on the social service by making more money for his social life, then he is giving up his right to political control, and he will become a capitalist, and the market capitalist.
Hayek’s work is the antithesis of what Marx argued in his 1786 pamphlet Capital in the Age of Social Control. Marx argued that the state was simply not necessary and there were too many people in power to make a complete revolution in society, but merely there to further and better society.[1] In order to overcome this need for power, the state must also be used to implement a progressive social program.
This was precisely what Hayek argued, and what he showed us.
The central point of Marx’s critique was the need to create a social system in which people, rather