Transcript Economic System

Bismillah Hirrahman ir Rahim
Islam
vs.
Capitalism
By
Nadeem Ghafoor Chaudhry
Haroon Ahmed Khan
Ideology: Creed and Systems
Every Ideology has a set of
fundamental concepts known
as “Creed/Deen”
Specific Systems emanate
from this Creed/Deen
Systems
Creed
Ideology: Creed and Systems
Ruling
system
Economic
system
Systems emanating from
the Creed
Education
Policy
Creed
Judicial
system
Social
system
Foreign
Policy
Secularism
One can believe
In a Creator(s)
Man, Life, Universe
One can
believe in life(s)
after death
Islamic Aqeedah
Accountability
Allah
Man, Life, Universe
Commands of Allah
Day of Judgment
Heaven, Hell
Capitalism: Extracting Systems from Creed
Secularism
Majority
Freedoms & Equalities
Economic
Morality
Ruling
Social
Judicial
Interest & benefit
Education
Policy
Foreign
Policy
Islam: Extracting Systems from Creed
Aqeedah
Ijtihad 1
(Only
Qur’an
Sunnah
Economic
Ruling
Social
for Zanni text)
Ijma us-Sahaba
Judicial
Education
Qiyas
Foreign
Policy
Ideology: Creed and Systems
Islamic System
Secularism
 Islam obliges the Muslim to use his  Secularism is not based on mind rather it
mind to believe in Allah and forbids
is built on a compromise between the
imitation in Aqeedah.
Clergy and the Philosophers
 Islam calls to look deeply in the  Instead of coming up with a rationally
universe to understand its law and to
correct
conclusion
of
the
questions
be guided to the belief in the existence
secularism compels man not to discuss the
of a Creator 1
issue that if there is a Creator and does He
have any relationship with this life, rather
settles it by finding a middle path in the
form of a compromised solution
Economic System
Economic Problem
Islamic Economic System
 Human needs are of two types
 Basic Needs (limited)
 Luxurious Needs
 World resources are enough to fulfil
basic needs of all the people of world 1
Democracy
 Human needs are unlimited while
there are limited resources to
fulfil them
Economic Problem
Islamic Economic System
 Human needs are of two types
 Basic Needs (limited)
 Luxurious Needs
Democracy
 Human needs are unlimited while
there are limited resources to
fulfil them
 World resources are enough to fulfil
basic needs of all the people of world 1
Solution:
Solution:
 Distribution of wealth and resources to  Needs of all the people won’t be
guarantee all basic needs to each
fulfilled
individual
 Increase Production to fulfil
 Create opportunities so that maximum
needs of as many people as
number of people can work to fulfil there
possible
luxurious needs
 Rules related to collection of funds and its distribution constitute “Economic
System” and cannot be taken from other than Islam
 Methods to increase production is “Economic Science” and can be taken
from other civilizations including the West
Resources are limited- Non sense

The United Nations Development Program (UNDP) reported in 1998 that the
world's 225 richest people now have a combined wealth of $1 trillion. That's
equal to the combined annual income of the world's 2.5 billion poorest people.

As of 1995 (the latest figures available), Federal Reserve research found that the
wealth of the top one percent of Americans is greater than that of the bottom 95
percent

According to the US Census Bureau, 35.9 million people live below the poverty
line in America including 12.9 million children. (http://www.census.gov)

The wealth of the three most well-to-do individuals now exceeds the combined
GDP of the 48 least developed countries

UNDP calculates that an annual 4 percent levy on the world's 225 most well-to-do
people (average 1998 wealth: $4.5 billion) would suffice to provide the following
essentials for all those in developing countries: adequate food, safe water and
sanitation, basic education, basic health care and reproductive health care.
Distribution of net worth and financial
wealth in theUnited States, 1983-2007
1983
1989
1992
1995
1998
2001
2004
2007
Top 1 percent
33.8%
37.4%
37.2%
38.5%
38.1%
33.4%
34.3%
34.6%
Total Net Worth
Next 19 percent
Bottom 80 percent
47.5%
18.7%
46.2%
16.5%
46.6%
16.2%
45.4%
16.1%
45.3%
16.6%
51.0%
15.6%
50.3%
15.3%
50.5%
15.0%
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
Where is the world is headed!!!!!
An analysis of long term trends as to the gap between the
richest and poorest countries
Year
Poor: Rich ratio
1820
3:1
1913
11:1
1950
35:1
1973
1992
44:1
72:1
Economic System:
Ownership & Types of Properties
Islamic Economic System
Capitalism
 Three types of ownership
 Freedom of ownership
 Individual
 Individuals or companies
can own anything and
 Public
everything
 State
companies are
 Oil, Gas1, non-delectable minerals2 etc  Multinational
‘free’ to own public properties
and anything on which society depends
such as oil, gas, parks etc
and people will disperse in pursuit for it,
 They are ‘free’ to spend or
remains in public ownership
hoard the wealth as they
 If these were owned individually this will
please
deny the public from benefiting from
these huge resources, creating misery
for the common man
 Huge resources for people’s welfare
 Cost of utilities much lower
 The foundation of economic colonisation
Economic System:
Pakistan’s Privatization Drive
Privatized
To Be privatized
 ABL, HBL, UBL, MCB
 Bankers Equity Ltd
 Hub Power Co, Kot Addu Power Co
 PTCL (Ufone, Paknet, TIP, CTI)
 Steel Mill (Decision Reversed)
 Ghee Corporation of Pakistan
 KESC
 UCH Power Ltd, Saba Power Ltd
 Dharki Power Ltd
 Oil and Gas exploration Licenses are
innumerable
 OGDCL, PSO, PPL, SNGPL, SSGPL
 NIT, ICP
 Sindh Engineering, Bolan Textile
 Lyallpur Chemical and Fertilizer Co.
 Javedan Cement, Karachi Shipyard
 Republic Motors, Lasbella Textiles
 Heavy Mechanical Complex
 HPFL (Hazara Phosphate Fertilizer
Limited)
 Jamshoro Power Co, Pak Arab
Fertilizer, Mustahekam Cement
 In first ten month of 2004-2005 assets worth $3.6 billion has been
sold: Survey 2005:2006
 Current year privatization target is 75 billion rupees.
Economic System:
Taxes
Islamic Economic System
Capitalism
No Taxes on common man1
 GST, Income Tax, Wealth Tax,  63.93% (Rs 840 billion) of revenue of
Pakistan comes from taxes on the people
Withholding tax, toll taxes etc are all
as per the budget 2006-07 figures.
haram and will be abolished
of these taxes 67.66% (Rs 569 billion)
There will be following permanent  Out
are indirect taxation that are to be paid by
taxes
even a beggar, unemployed, daily wages




Al-Kharaj 2
Al-Jizya 3
Al-Ushr 4
The fifth of Al-Rikaz 5 (hidden treasures
minerals)
 Import and export duty on foreign
traders 6
 Zakat on import and export of the
Muslim Trader 7
 Hima (Protecting from public properties)
worker, handicapped, widow, elderly people
and children without any differentiation.
Economic System:
Agriculture and Land laws
Islamic Economic System
 Lease
of
agricultural
(Muzariyat) is haram1
Capitalism
lands  Leasing of agricultural lands is
permitted
 Agricultural land if not used for 3  No such restriction applies to an
years will be confiscated2 and
owner. He is “free” to do whatever
allotted to someone who would
he pleases
cultivate it
 Prohibition of Muzarat coupled with obligation to cultivate land will
give rise to land distribution of optimum productivity
 Eradicates injustice to Muzarays
 Delivers a fatal blow to the colonialist Feudal system (“jageer darana
nizam”)
Economic System:
Agriculture and Land laws
Agriculture and Land laws
Islamic Economic System
Capitalism
 Any Muslim or a Zimmi who revives a  No such provision in Capitalist
dead Ushri land would also own the
system.
Muzzara’s are being
neck and the produce of the land
killed for asking their rights in
Okara.
 Any Muslim who revives a dead Khiraji
corporate
farming
land which was never cultivated  Through
imperialist
multinationals
are
since Muslims opened it, would own
being awarded.
the neck as well as produce of the
land
 Sudan faced famine due to the
policy of corporate farming.
 Any Muslim or a Zimmi who revives
a Khiraji land on which Khiraj was
applied in the past would own the
produce of the land but the neck
remains with the State
 Huge incentive for reviving 9,709,300 (one crore) acres of barren land of
Pakistan.
 Provides employment to people living in the villages
 Gives huge push to the economy
Colombian warlord says US firms paid death
squads for bananas
Rory Carroll, Latin America correspondent
Saturday May 19, 2007
The Guardian
A jailed warlord has accused the US multinationals Del Monte, Dole and Chiquita of
funding rightwing death squads while sourcing bananas from war-torn regions of
Colombia.
Besides this, government is also going to develop a new security
force of 100,000 men to be split among the four provinces to help
stabilize the investment by Arab Monarchs. This will cost the
government about $2 billion to pay the salaries and train the
security force.
http://www.cadtm.org/Pakistan-starts-privatization-of
Residential Land
Islamic Economic System
Capitalism
 Anybody who occupies a dead land  The system doesn’t allow the
(outside the planned city area) and
people to use the resources which
revives it by building a house or a
Allah has bestowed to man
factory etc becomes the owner of
the land as well
 The State guarantees housing for
the one who is in capable to build a
house for himself and his relatives
are also poor cannot support him
 The Prophet (SAW) said: “The Son
of Adam has rights to food, clothing
and shelter.”
 Common man’s biggest problem in building a house is the inflated
prices of residential land that can easily be solved through the Islamic
Economic System state.
Currency
Islamic Economic System
 Metallic Currency




Gold
Silver
Any other precious metal
Currency notes can be used in lieu
of gold and silver
Capitalism
 Fiat currency backed by confidence
 Dollar
 Euro
 Protects the currency from foreign control
 Puts a check on devaluation and fake inflation
 Return of the Gold standard will strike a fatal blow to the colonialist
economy
Company Structure
Islamic Economic System
Capitalism
 All contracts should conform to  Man made laws aimed at benefiting
contracts laid down by shari’ah.
corporates are to be complied.
Hence exploitation of the needy is
Rules have been written to benefit
not possible
those who wrote them. Golden rule!
“he who has the gold rules”
 Public limited and private limited  Stock-exchange an integral part of
companies Illegal. i.e. no stock
western corporate business.
exchanges, futures trading etc. in
Islamic Economic System
 Speculative contracts lead to fiat (Alternative) economy and indexes
which is used by the corporations to loot common man’s money while
keeping them in dark as happened in the latest saga of energy giant
Enron and second largest telecom company WorldCom.
 Islamic Economic System’s economy will be protected from economic
crisis as were witnessed in South East Asia during the late ’90s when
“Asian Tigers” were wiped by the powerful foreign investors
Valid Companies in Islam
Islamic Economic System
 The Company of Equal (Al-’Inan)
 The Company of Bodies (Al-Abdan)
 The Company of Body and Capital
(Mudharaba)
 The Company of Reputation Faces
(Wujooh)
 Company of Negotiation (Mufawadha)
Capitalism
 Public Limited Company
 Private Limited Companies
 Guarantee Limited
 Unlimited Company
 A Man is not separate from his  The Company and the owner
company
are two separate distinct bodies
 He is responsible for the debt of the  Owner is not responsible for the
company. He the stake holder money is
debt of company beyond his
safeguarded
investment
 A man can not hide behind the  Owners always hide behind the
corporate rules at the time of
corporate rules at the time of
bankruptcy
bankruptcy.
Riba
Islamic Economic System
 Interest transactions not allowed1
Capitalism
 Freedom of ownership allows people
to hoard money
 No interest based debt servicing
 Encourages the wealthy to under  Riba is the bate for the people to take
money out of circulation/ investment
take local investment rather than
and to put into deposit account
depositing their money in high
interest deposit accounts
 In 2006:07 Pakistan will pay 295
billion rupees in interest payment.
This is 55 billion more than all foreign
loan and grants for the year.
 Relief to common man/ investor
 No interest servicing to IMF and WB.
Banking System
Islamic Economic System
Capitalism
 Bank do not serve as financial  Banks acts as financial intermediaries
intermediaries. Hence in capitalist
sense there are no banks.
 They provide services like debit card,
LC for import export, Online fund
 They will provide services of the
transfer, internet payments, credit
like debit card, LC for import
cards. Financing for various heads on
export, Online fund transfer,
interest etc
internet payments, etc.
 They
will
facilitate/establish
communication
between
the  A source of hoarding of wealth
investor (Muwakkil) and worker
(Mudharib)
 Islamic Economic System takes advantage of financial institutions
providing financial services and networking whilst protecting the
masses from the current banks system which spread their evil through
hoarding of wealth, marginal reserve system and interest etc.
Stock exchanges
Islamic Economic System
Capitalism
 No stock exchanges are there in  A major portion of investment is done
Islamic Economic System.
in stocks whose more than 90 %
portion has nothing to do with real
trade.
 No speculative transactions are
allowed as per Islam. Investment
is done only in real trade  Real trade has gradually been
strengthening economy.
reduced to less than 10 % of
international trade and 90% is only
financial transaction.
 No chance of drowning of money
in stocks as recently happen
when 4 billion dollars of small  Last year stock market crashed
investors were lost in a matter of
several times drowning trillions of
a week when KSE index dropped
rupees of investors.
from 10,000 to 7000 points.
 Stock exchanges are a source of diversion of investment from real trade
to speculative business.
 If all the money that is invested in stocks is directed to real trade it will
give rise to a robust economy
Foreign Loans- no way
Islamic Economic System
Capitalism
 Taking Foreign loans would not be  Foreign loans are the integral part
allowed 1
of Pakistan’s capitalist economy
 This year 239 billion rupees will be
 Membership
in
colonial
received as different type of foreign
organisation is also not allowed like
loans.
Paris
club,
ADP,
Islamic  In 1980 Nigeria took a loan of $3.5
Development Bank, World bank
billion from the Paris club. By 1985
and of course IMF.
this debt had risen $5.8 billion. By
1998 it had risen to 20.9 billion, and
is today estimated at 27 billion.
 Sovereignty of Pakistan was mainly eroded due to foreign loans
 IMF and WB dictate all our internal policies under the guise of
‘reforms’ and ‘good governance’
 Islamic Economic System would liberate us from IMF & WB Structural
Adjustment programmes (SAP’s), Poverty reduction strategy Papers
(PRSP) conditionalities and improve our economy
Economic System:
Foreign Traders − not MNC’s
Islamic Economic System
Foreign trade is assessed on the basis of the citizenship of the
trader and not the origin of the goods except goods from countries
we are in actual war with like Israel.
Merchants from countries that have treaties with the State are
treated according to the terms of the treaties
Merchants from countries in a state of war with the State are
prevented from trading in the State, unless given a special
permission
Any country with whom we have actual war with, its citizens (such
as Israel) is excluded from these rules. The rules applicable to the
actual land of war (Dar al-Harb Fa’lan) apply to such country in all
the relations
Economic System:
Local Traders
Islamic Economic
System
Capitalism
 Merchants who are subjects of  No such provision, hence Pakistan is
the State are prevented from
helping India fulfil her energy needs
exporting any goods that the
by building two gas pipelines. Which
enemies
could
benefit
of
would further strengthen Indian
militarily,
industrially
or
industry and Military to be used
economically
against Muslims of Pakistan
 This Trade Policy protects the state from potential enemies in the future
 They are not prevented from  The government hurts the local trader
importing any property they own
under the pretext of “Smuggling” while
under the pretext of protecting
reduces import duty to give monitory
the local industry
benefit to the foreign trader under the
guise of “foreign investment”
 There is nothing known as “Smuggling” in Islam as long as the citizen of
the state imports Halal items
Import export duties
Islamic Economic System
Capitalism
 A Muslim trader only has to pay Zakat  Import and export duties
(2.5%) of the property during import and
may be as high as 15 to
1
export once a year
20%.
 No import or export duty other than zakat
 Import duties on luxury cars
reduced to suit the rich
 A Zimmi (non-Muslim citizen) will pay  No such distinction
according to the contract he had with state
at the time of conquest 1
 A Harbi (foreigner non-Muslim) will pay the  No such distinction
same percentage of duty as his country
applies on the traders of the Islamic
Economic System 2
 Low import and export duties will enhance trade and improve not only
the conditions of the trader rather it will also help our exports
 In a Capitalist state people in the legislative assemblies reduce and
increase duties to suit their interests and make money.
Subsidy & WTO Regime
Islamic Economic System
Capitalism
 State
cannot
join
colonialist  No such restriction while joining these
1
organizations
organizations such as WTO
 State is automatically protected from the colonialist moves to control and
cripple the economy. Even a treacherous ruler cannot harm the State if the
Islamic system is implemented
 State will provide subsidy to  WTO regime wouldn’t allow states to
improve it’s economy
give its industry/agriculture any
subsidy
 During the last whole century capitalists first strengthened their own
economies through corporate mergers, subsidies and heavy import
duties and now they are forcing other weak economies to open up
their markets under the guise of “Free Trade” and provide “level
economic playing field” to foreign and local businesses
 Under the guise of Anti-Dumping, Environment and Child Labour laws
the WTO has introduced handicaps to increase the cost of production
of the third world countries.
Patent laws and Copy Rights
Islamic Economic System
Capitalism
 Copyright and Patent laws are illegal in  In
April
2005
Pakistan
Islam. Nobody is allowed to reserve the
established IPO.
publishing and printing rights including the
author or prohibit use of technology under  US didn’t allow other western
patent laws
countries to produce medicine
 If the book has not been printed and
for HIV since the patent laws
published, and thus is still an idea, the
were with the US company
owner has the right to take payment for
irrespective of how many
transferring these ideas to the public, the
same way he can take payment for
people could die because of it
teaching them.
 But when it came to “Anthrax”
 Trade marks would be protected ensuring
US threaten to bypass all
that the buyer may not be deceived in
patent laws for their own
buying sub-standard merchandise
“national interest”
 Copyright and patent laws are a big hurdle in dissemination of knowledge
and in the welfare of the humanity.
 Sahih Al-Bukhari and Sahih Al-Muslim, and books of old Muslims
Scientist were never copyrighted. Had it been so, the west would still be
in dark ages
 Copyright laws are a tool of scientific colonisation of the west
Economic System:
Hoarding of Wealth & Price Fixing
Islamic Economic System
Capitalism
 Hoarding of wealth (money) is  People are “free” to hoard wealth for no
haram and state will take practical
reason
1
steps to prevent it
 Islamic system ensures circulation of wealth
 In Capitalist system banks offer “interest” to encourage people to inject
money into economy
 Islam prohibits price fixing 2
 Islam prohibits monopoly 3
 Capitalist are still in dilemma as to how
to get rid of monopolies; e.g. Microsoft
break up litigation
Economic System:
Basic needs of the masses
Islamic Economic System
Capitalism
 Basic needs of all citizens are  In the purest form of capitalism
guaranteed such as food, clothing,
there is no concept of public
shelter, education, health etc.
welfare.
 The land laws discussed earlier
allow people to attain self-sufficient
in food and housing as explained
above
 Islamic Economic System alleviates the suffering of the masses
 Decreases crime and insecurity in the society
 Produces a secure economic atmosphere which increases economic
activity and investment as the investor doesn’t run the risk of being
homeless and struck by hunger in case of a loss
Economic System:
State Revenues
Islamic Economic System
Sources of Bait -ul-Mal












Capitalism
 Predominant source of
income is Taxes from
The booties and the spoil of war1, Al-Fai2 and the fifth3
the common people.
Al-Kharaj
People in the west are
Al-Jizya
taxed upto 35% of
Protecting some Public property (Hima) 4
their income
State property of land, building utilities and their
revenues)
Al-Ushur
Money attained illegally by the rulers, the employees of
the State, illicit money and money from penalties
The fifth of Al-Rikaz (hidden treasures) minerals 5
The inheritance property of the one who has no
inheritors 6
The property of apostates 7
Charity Funds – Zakat
Taxes (only from the rich Muslims and in specific situations)
Budget expenditure
Islamic Economic System
The expenditures of the State are based around seven areas:
The Zakat funds – on fix 8 categories mentioned in the Qur’an.
Spending money on the destitute and the poor to ensure their basic needs is a
must on the State.
Spending on defence, heavy industry and security of the State as well as
carrying the Islamic Message to other lands.
Allowances of State employees such as salaries of soldiers, civil servants,
judges, teachers and the like.
Provide utilities to the people such as roads, water services, power services,
mosques, schools and hospitals and any other utility considered as necessity for
the people.
Emergency expenditures such as during famine, flood, earthquake or attack by
enemy.
Spending on development projects – Only if fund available
Decision making in Autocracy
(dictatorship of an individual)
Decision making
The ruler
The ruler
The ruler
Legislative
Economic
Ruling
Social
Judicial
Education
Policy
Mubah
Mubah
(General issues)
(needing expertise)
Foreign
Policy
Decision making in Democracy
(dictatorship of an elite group)
Decision making
Elite Group
Elite Group
Elite Group
Legislative
Economic
Ruling
Social
Judicial
Education
Policy
Mubah
Mubah
(General issues)
(needing expertise)
Foreign
Policy
Decision making in Islamic Economic
System
Decision making
Allah’s Ahkam
Khaleefah
Are implemented
derived from the
sources, Qur’an,
Sunnah, Ijma us
Sahaba
Qiyas
is final
authority
after
discussing
with
experts
People
Mubah
Legislative
Economic
Ruling
Social
(General issues)
Judicial
Education
Policy
Foreign
Policy
Through their
Mubah
representatives
(needing expertise)
decide based on
majority
Ruling System:
Law making - the actual Cause of Corruption
Islamic Economic System
Democracy
Political system gets cleaned from  Corrupt people are attracted towards
corrupt people
politics like bees towards nectar
The representatives cannot use the
system to cover up their corruption by
legislating laws for their own interests
“Professional politicians” find no reason
to invest millions as the job of the
representative is to be serving the
Ummah rather than a source of money
making and exerting power
 The process of law making gives
parliamentarians the authority to make
laws to not only protect their interests
rather legitimize their corruption
 “Professional politicians” invest millions
of rupees in elections and rear
“Ghundas”, to keep sincere people out
of the political arena
 Once in power, the corrupt entourage of these “Professional Politicians” i.e. the
local “Ghundas” become untouchables, free to take “Bhatta” and kidnap for ransom
 Hence democracy is the actual source of corruption in the society. It starts from the
politicians at the top and goes all they way to the bottom with local “Ghundas” and
“Jaggas” who have the protection and backing of these politicians and Govt.
institutions
Ruling System:
Political Hierarchy (Flow Chart)
Majlis-e-Ummah
All
Citizens of
Islamic Economic System
Khaleefah
• Elected by the people to represent them
• Short lists nominees for Khaleefah
• Scrutinize newly adopted laws and
decision of the Khaleefah
• Make the Khaleefah change the Walies
• Elected directly by the Ummah
Or
• By Muslim members of
Majlis-e-Ummah
• Heads the
millitary
• Responsi
ble
for
their
training
Ameer
Al-Jihad
• Has all
powers of
ruling like the
Khaleefah
• Has to report
to Khaleefah
after taking
an action.
• His ruling can
not contradict
theDelegated
adoption
of Khaleefah
Assistant
• Only has
executive
powers
• No ruling
powers
• Implements
rulings of the
Khaleefah
and brings
him feedback
from the
Executive
Ummah
Assistant
• Three types of
qadies, Qadhi
Aam, Qadhi
Mohtasib,
Qadhi Mazalim
• A body of the
people which
executes the
Islamic State’s
orders
• Qadhi
Mazalim can
impeach the
Khaleefah.
During the
hearing the
Khaleefah
Judiciary
cannot
remove the
Qadhi
• Motor vehicle
dept.
• Zakah
Collection
dept.
• Marriage and
The
Statedept.
divorce
•Departments
And others
• Appointed by
the Khaleefah
• Assists
the
Khaleefah in
ruling
and
implementing
Islam in the
province
• Distributes
income
to
public
and
collects
Governorsfunds
for the State
• Police and
other law
enforcing
agencies
Internal
Security
• Heavy
Industry
geared
towards
supportin
g Jihad.
Industry