Boundaries of Capitalism in the Islamic Worldview

1. Boundaries of Capitalismin the Islamic Worldview Omer bin Ahsan

2. Objective of the Presentation • A study of the historical process through which Capitalism came into being • A study of historical, metaphysical, epistemological process through which Capitalism and Islamic Economics emanates • A study of non-conformity with Islamic principles of equality and justice • Study of Limitation of Capitalism and its consequences contextualized within the Islamic conception of Reality

3. Capital and Capitalist • The term capitalist as referring to an owner of capital. Capitalist is derived from capital, which evolved from capitale, a late Latin word based on proto-Indo-European caput, meaning "head" — also the origin of chattel and cattle in the sense of movable property. Capitaleemerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, or money carrying interest

4. Capitalism • Capitalism is a philosophy of economic systems that is generally considered to favor private ownership of the means of production, creation of goods or services for profit or income by individuals or corporations, competitive markets, voluntary exchange, wage labor, capital accumulation, and personal finance

5. Types of Capitalism • Mercantilism and Protectionism • Free Market • Social Market • State Capitalism • Corporate Capitalism

6. History of Capitalism • Ecclesiastic Descartes postulated the supremacy of epistemology over metaphysics. Protestantism developed the work ethics more labor for more compensation • 16th-18th Century is called Age of Discovery that led to Mercantilism. However, "mercantilism, with all its tendency toward commercialization, never attacked the safeguards which protected [the] two basic elements of production—labor and land—from becoming the elements of commerce” (Polanyi) • A new group of economic theorists, led by David Hume[44] and Adam Smith, in the mid 18th century, challenged fundamental mercantilist doctrines as the belief that the amount of the world’s wealth remained constant and that a state could only increase its wealth at the expense of another state. Industrialism driven by a complex division of labor and agricultural surpluses established the global domination of the capitalist mode of production. • Depression and World War II marks the period of Keynesianism. However in the 1970’s the stagflation and recession reduced the credibility of Keynesianism and Classical Liberalism/Laissez Fairez under Hayek and Freidman became dominant. Monetarism that the State will only control the money supply to control inflation. • 21st Century Globalization allows mobility of capital/resources through technology gives Capitalism a totalizing ability

7. Metaphysics and Epistemology of Capitalism • Anthropocentric world view • What is real is Self • Reality is determined through Rationality and Experience. • If Experience determines truth for the individual then Rationality is the determinant of right and wrong • Self demands control and autonomy to determine right and wrong for self gratification • Epistemology supersedes Metaphysics

8. Self Gratification • Self gratification is the pursuit and achievement of Happiness/Satisfaction. • This pursuit is inhibited by the incapacity to attain due to state/societal/religious controls, physical inability and lack of resources to obtain the pleasure. • Freedom is the overcoming of these inabilities by; • Freedom from societal/religious/state control • Technology or Technique for physical inability • Capital from the lack of resources Thus freedom becomes synonymous to the acquisition of wealth as it provides freedom, resources and technology. The intrinsic value of capitalism is accumulation of wealth for enhancing freedom and autonomy of Man.

9. Why is Capitalism Totalizing in its Effect • Capitalism appeals to human arrogance and self indulgence it offers a relief from the pains of intellectual and moral inquiry into doing what is right under the instructions of an authority; state or religion. • Protestantism/English Reformation eliminated religious authority. Enlightenment removed religions role in the State. Industrialization and Capitalism weakened state authority. • Power is concentrated in the hands of the most wealth and every one is free and equal as a human because each human acts and thinks in accordance with the capitalistic ethos. • Wealth demands a liberal order, free market economy and human centric principles in order to individualize society on the basis of Consumers and Producers. A Capitalist man will naturally and circumstantially turn into a capitalist missionary. • The instruments of this influence are corporations, Cosmo-liberal lifestyle through media & entertainment, news, direct war, democracy, professionalization of education system and creating a liberal intelligentsia through Universities, media, literature and youth activism • Totalizing effect is brought into place by; • Compliance and Conformity of religious, traditional and cultural values to capitalistic ethos • Dilution of traditional values • Total rejection of religious, traditional and cultural foundations .

10. Capitalist Ethics • The ethos of capitalism are; • Wealth enhances freedom • Problemization of poverty • Stinginess as a result of hoarding and saving. • Sacredness of Progress and Development • Rooted in Modernism, Post Modernism and Liberalism • Competition • Pursuit of pleasure • Pursuit of autonomy through wealth • Dilution of Traditional Values • Market control over the society

11. Negation of ilah • The Islamic Kalima – La Ilaha Ill Allah, Muhammad ArRasool Allah. • Begins with Negation of any thing that asserts its self as god in order to determine what is right and wrong such as • Man’s autonomy – moral and intellectual pride • Wealth • Family • Power • State • Ethnicity • Culture • Cult Figure • Celebrities • Media After the negation is the assertion of One Sovereign Omnipotent and Omnipresent God Who Reveals the Truth through His Messenger (SAW)

12. Capitalism and its Consequences • Market mechanism is in conflict with other social mechanisms • Capital as the intrinsic value for structuring society influences and consumes in its totalizing effect other values such as generosity, cooperation, forbearance, justice, virtue, kindness and loyalty. • Sanctification of wealth and property • Market failures as governed by the Invisible Hand – considered inalienable and sacred the laws of demand and supply.

13. Capitalism and its Consequences • Enclosures in England disrupt lives of poor and creates a labor market that is the fuel of the Industrial Revolution. • Colonization and Exploitation of developing nation, labor and natural resources sparking; • Wars and genocide • Scarcity • Social Disruption – destruction of the family • Inflation • Environmental Degradation • Technological dependence has created sedentary life and electronic eyes • Disease • Population Explosion All these phenomenon have an exponential increase that is directly related to the expansion of capitalist ideology amongst nations

14. Metaphysics and Epistemology of Islamic Economics • Ultimate Reality is God • God is Sovereign • Reality can be known through what God Reveals through his Book and His Messenger. • Truth is interpreted by Rationality and Experience against the standards set by God’s Revelation, Messenger’s Instructions and Examples of the Messengers Companions in the time called QairulQunoon -23 years of Prophet hood of Muhammad(SAW) • Right and wrong is determined by that standard and anything that does not belong to that Conception of Reality and Source of Knowledge is considered as Innovation, Way of Ignorance, disobedience and Arrogance. Intrinsic value of Islamic conception of Economics is obedience to God who is the giver and taker of wealth as a means of sustenance in order to full our duty to God and spread His Message by forbidding Evil and enjoining Good

15. Islamic View of Economics • Islamic State is responsible to distribute and revolve wealth equally through the institution of Zakat, Ushr, Jiziyah and other progressive Taxes • Wealth is a means to an end not the end in itself. The end for a Muslims being attaining Jannah in the life Hereafter as a result of obeying God • Material needs are for the sustenance and survival of man in order to obey and worship God. • Commodities/services and its trader thereof shall not determine the structure of the society • Allah created resources in the earth as a favor on us but warned us not to be greedy and take only is required. • The Islamic Economic system is seen to be a sub system of the complete and closed Islamic system and its linked with other subsystems (political, moral, cultural, spiritual) – Maududi (1953)

16. Revisionist Islamic Economics and its limitations- Islamic Banking and Finance in its Modern form • Determines capitalism as natural and historic • Determines laws of demand and supply as natural. • Determines market forces as legitimate. • Legitimizes the objective of economic and human development to place Islamic societies in the Global Capitalist order • Parallels of such conformist thought,that lead to modernization and secularization of religious society, can be found in the English Reformation, Enlightenment and German Protestantism

17. Islamic Economics Ethics • Reciprocity and Gift Exchange • Generosity • Self Sufficiency and Simplicity • Cooperation • Poverty considered noble • Responsibility • Moderation in Consumption • Avoiding Excess and Waste

18. On Hoarding • Al-Imran: 180 “And let not those who are niggardly, who withhold the gifts which Allah has given them from his Grace, think that its good for them. Rather it is worse for them, That which they hoard will be their collar on the Day of Resurrection. To Allah belongs the heritage of heavens and the earth, and Allah is informed of what you do”

19. On Stinginess • Quran(9:24) “Say: If t be that your fathers, your sons, your brothers, you mates, or your kindred, the wealth that you have gained; the commerce in which you fear a decline, or the dwellings in which you delight, are dearer to you than Allah, or His Messenger, or the striving in His Cause, then wait until Allah brings about His Decision and Allah guides not the rebellious”

20. On Poverty and Progress of Nations • SahihBukhari (Vol 3, Book 43: Oppressions, No.648) “I sat down and cast a glance at the room, and by Allah, I couldn’t see anything of importance but three hides. I said (to Allah’s Apostle) ‘Invoke Allah to make your followers prosperous for the Persians and the Byzantines have been made prosperous and given worldly luxuries, though they do not worship Allah!’ The Prophet was leaning then (on hearing my speech he sat straight) and said, ‘O Ibn Al Khattab! Do you have any doubt(that the Hereafter is better than this world)? These people have been given rewards of their good deeds in this world only’ I asked the Prophet ‘Please ask Allah’s forgiveness for me’”

21. On Generosity and Competitiveness • Quran (59:9) “who harbor in their hearts no grudge for whatever the others may have been given, but rather give them preference over themselves, even though poverty be their own lot: for such as from their own covetousness are saved – it is they, they that shall attain to a happy state!”

22. On Moderation, Excess and Waste • Quran (7:31) “O Children of Adam! Wear your beautiful apparel at every time and place of prayer; eat and drink; But waste not by excess, for Allah loves not the wasters.

23. On Simplicity • Quran (43:33-34) “And were it not that (all) men might become of one (evil) way of life, We would provide, for everyone that blasphemes against (Allah) Most Gracious, silver roofs for their houses and solver stair ways on which to go up. And Silver doors to their houses, and thrones on which they could recline. And also adornments of gold. But all this were nothing but convenience of the present life. The Hereafter, in the sight of thy Lord is for the Righteous.”

24. On Cooperation • Quran (5:2) “help one another in furthering virtue and God consciousness, and do not help one another in furthering evil and enmity and remain conscious of God”

25. Conclusion Muslim Worldview based on its conception of Reality and source of knowledge is one that challenges and deconstructs capitalism. It relies on the Quran and Sunnah as the measure of right and wrong with the objective of obedience to Allah (SWT) and rejects and declares enmity with anything alien to this foundation. Capitalism is alien to Islamic fundamentals, it cannot be accepted and it cannot be made to look in conformity with Islamic ethos because both are directly against each other in their conception of Reality.

26. Reference • Quran and Sunnah (SahaSitah) • Dr. Javed Ansari • Business Ethics in Pakistan • Dr. Abdul WahabSuri • Lectures and Discourse • TaqiuddinNigahbani • Economic System in Islam • Internet Encyclopedia of Philosophy • Will Durant • Story of Philosophy • Karl Polanyi • The Great Transformation • Bertrand Russel • History of Western Civilization • Dr. Asad Zaman • Rise and fall of market economy • Market Economy and its limit • Islam versus Economics