Economic
Justice: Islam versus Capitalism
by
Dr. Mohammad Malkawi
March 28, 2002
1
Introduction
The success or failure of an economic system is
measured by the direct impact on the humans who live under that economic
system.
The level of security and satisfaction provided
to the people further measures such impact.
The security and satisfaction are further
measured in terms of:
a.
food security;
b.
health security;
c.
education security;
d.
life expectancy;
e.
moral, ethical, and ideological conviction, and
trust in the economic foundation.
Two major systems have dominated the world
arena in the last 100 years, namely capitalism and socialism.
Socialism collapsed before the end of the 20th
century with a complete failure, and hence will not be the subject of this
talk.
Capitalism continues to dominate the entire
globe, with different flavours and varieties implemented in different parts of
the world. The dissatisfaction of people
under socialism, and the accompanying pain and suffering have ended, but have
been replaced by yet another type of pain and sufferings.
After the collapse of socialism, capitalism had
entered the era of global economy, more officially called globalization,
thus impacting on most of the people in the world.
This lecture will explore the impact of
capitalism on the plight of people in poor as well as in rich or super rich
countries. The lecture will introduce a
new economic system that the world is yet to explore, understand, and
implement. This system is based on
Islam.
2
The Capitalist Economic System
2.1
Theoretical Foundation
Capitalism deals with man’s needs and the means of satisfying those
needs. It addresses the materialistic
side of man’s life and it is established on three principles:
a.
relative scarcity
of commodities and services in relation to needs;
b.
the economic
value of a product; and
c.
the price, and
its role in production, consumption, and distribution.
2.1.1
Relative Scarcity
Man has needs
that require satisfaction, so there must exist the means to satisfy them. These needs are purely materialistic, such as
the need for food, clothing, medicine, education, and security. As for the moral needs such as pride and
honour, or spiritual needs such as the sanctification of God’s will, they are
not recognized economically, and are therefore disregarded and have no place in
economic studies.
Commodities and
services are the means of satisfying the human needs. What makes commodities and services satisfy
the needs is the benefit embedded within these commodities and services. This benefit is an attribute, which renders
the thing desirable for satisfying a need.
Since the need means the economic desire, then an economically
beneficial product is anything desired, whether it is essential or not, even if
some consider it beneficial and others consider it harmful. It is considered economically beneficial as
long as there is someone who finds it desirable. Products may be considered beneficial from an
economic viewpoint even if the public opinion considers them of no benefit, or
harmful. Thus wine, tobacco, drugs,
guns, and apples are beneficial things since there are people who desire them. Stocks, interest rates are also beneficial as
long as there is someone who would benefit from their use.
The capitalist
looks at the means of satisfaction, that is, the commodities and services, from
the viewpoint that they satisfy a need, without taking any other factor into
consideration. So she considers wine in
its capacity of having an economic value because it satisfies the needs of some
people, and she perceives the wine maker as one who provides a service,
considering this service as having an economic value, because it satisfies the
need of some people.
As such,
capitalism does not concern itself with the nature of society, but rather with
the economic material resources (economic commodities), as means of satisfying
human needs. Therefore, the capitalist
economic system primary function is to supply commodities and services i.e. to
provide the means of satisfying man’s needs, irrespective of any other
consideration. The commodities and
services, which are the means of satisfaction, are considered to be limited
relative to man’s needs, which are unlimited and constantly growing. Capitalism recognizes that man has basic
needs, which must be satisfied, and needs which increase in number as man
proceeds to a higher level of urbanization.
These needs multiply and increase, need complete satisfaction, a goal
that cannot be fulfilled, no matter how much commodities and services are
produced.
This basic
principal of capitalist economic philosophy provides the basis for the
definition of the economic problem under capitalism. In particular, the problem that capitalism
attempts to resolve is the satisfaction of an ever growing human needs using
insufficient resources and means of satisfaction. This is the essence of relative scarcity of
products.
The inevitable
consequence of relative scarcity is that some needs are either partially
satisfied or not satisfied at all. Which
needs get satisfied and which are deprived, and whose needs are satisfied and
whose are deprived is completely determined by the economic set of rules and
policies, which are adopted by any given capitalistic society. These rules and policies define the manner of
distributing the limited resources over the unlimited needs. It should be noted, however, that the problem
is to make the resources available so as to satisfy the needs in a society, but
not necessarily the needs of every individual.
It is not surprising therefore, that the main focus of the economy under
capitalism is the increase in the national production (GDP and GNP). Economic growth is viewed as a means of solving
the problem of poverty.
There are serious
flaws with the principal of scarcity of products:
a.
Correlation
between the needs and the means of
satisfaction.
Under capitalism, the production of commodities and services, which are
the means of satisfying the needs, together with the distribution of these
commodities and services are considered to be one major subject. Thus, capitalism holds one view towards the
economic science and the economic system without differentiating between
them. In reality, there is a major
difference between the economic system and economic science.
The economic system is a set of rules and regulations, which
define how to distribute the wealth, how to possess it, and how to spend or
dispose of it. This system (set of rules)
is based upon a particular viewpoint in life, or ideology. Therefore, the economic system of Islam is
different from that of socialism/communism and that of capitalism, since each
of these systems follows its own ideological viewpoint.
Economic science deals with the production, its improvement, invention
and improvement of its means. Economic
science, as is the case with other sciences, is universal to all nations and is
not associated with a particular ideology.
For example, the rules of possession and ownership under capitalism
differ from the rules under socialism, and from those under Islam.
On the other hand, the improvement of production is a technical issue,
which is purely scientific, and does not depend on a particular ideological
viewpoint.
The integration between the production of the economic material and the
manner of its distribution is a fundamental fault in the capitalist system
which is bound to cause failure in the economy of capitalism.
b.
The human needs are not materialistic only.
The reference to the needs, which require satisfaction as being purely
materialistic, is wrong, and contradicts the natural reality of human
needs. Human beings have
moral, spiritual, and ethical needs that require satisfaction, which in turn
require commodities and services for their satisfaction.
c.
Commodities and services relation to the
society.
The Capitalist economy looks at the needs and benefits as they are, not
as the society should be. Thus, man is viewed
as a purely materialistic creature, with no relevance to his spiritual needs,
ethical thoughts, and moral objectives.
Capitalism does not give weight to any value, except to the material
value of the product and the material nature of the human need. Cheating in the economic sense is valuable as
long as it leads to profitability (Enron and Arthur Anderson). Monopoly is feasible economically, while it
can be maintained and supported (Microsoft).
Under capitalism, feeding a poor (wealth distribution) may be done only
if it brings a material benefit, such as tax break. But it will not happen in response to an
order from God or in pursuit of God’s pleasure and satisfaction.
The exchange of resources and efforts among people creates relationships
among people, according to which the structure of the society is formed. Thus, viewing the economic commodity as a
means of fulfilling a need, without caring for what the society should be,
violates a fundamental rule of society structure. The effect on society should be perceived
when considering the economic commodity.
Therefore, it is incorrect to consider a thing as beneficial just
because there is somebody who likes it, whether it is harmful or not, and
whether it affects the relationships among people or not, and whether it is
prohibited or permitted in the belief of the people in the society. Rather things should be considered beneficial
if they are really beneficial in respect to what the society should be.
Therefore, it is incorrect to consider alcoholism, cannabis, opium,
explosives and the like as beneficial commodities and to consider them economic
commodities just because there is somebody who wants them. Instead, the effect of these economic
commodities on the relationships between people in society must be considered
when considering the benefit of things, i.e. when considering the thing as an
economic commodity or not. Things should
be viewed in relation to what the society should be. It is wrong to look at a product merely as it
is, regardless of what the society should be.
By including the subject of satisfying the needs within the subject of
the means of satisfaction, and by viewing the means of satisfaction only as
satisfying a need, and not by any other consideration, capitalism concentrate
on production of wealth more than distribution of wealth.
d.
Poverty of individuals is the main economic
problem.
The importance of distribution of wealth to satisfy the needs has become
a secondary issue. Therefore, the
capitalist economic system main aim is to increase the country’s wealth as a
whole, and it strives to achieve the highest possible level of production. The achievement of the highest possible level
of satisfaction for the members of society should come as a result of
increasing the national income, or the gross national product. This should be achieved by raising the level
of production in the country, and by enabling individuals to acquire the wealth
as they are left free to work and produce.
So the economy does not attempt
to satisfy the needs of the individuals and to facilitate the satisfaction of
every individual in the community, rather it is focused on satisfying the needs
of the community as a whole by raising the level of production and increasing
the national income of the country as a whole.
Through the availability of the national income, the distribution of
income among the members of society occurs, by means of freedom of possession
and freedom of work. So it is left to
the individuals to acquire what they can of the wealth. Everyone strives to get his/her share of the
wealth using whatever means, skills, or tools he/she can afford. Whether the individual is or is not able to
satisfy his/her needs is not of concern to the economy, as long as the
production of goods continues to grow, and the wealth continues to grow.
This is the major principal of the capitalist economy. It is inherently wrong, and contradicts
reality and does not lead to an improvement in the level of livelihood for all individuals,
and does not fulfil the basic needs of every individual. It does not resolve the issue of poverty for
the individuals, despite the massive increase in the production of goods and
services. The hard fact in this reality
is that the needs, which require satisfaction, are individual needs. They are needs of particular people such as
George, Maria, Hassan, Mohammad, and the like. The fact that the needs of George are
satisfied does not make Maria any better, unless her needs are also taken care
of. So these are needs of individuals
and not needs for a group of human beings, a group of nations, or a group of
people.
Therefore, the economic problem must focus on distributing the means of
satisfaction for all the individuals of a society. In other words, the
distribution of the funds and benefits must reach every member of the nation or
people. It is not sufficient to increase
the wealth of the group, irrespective of the plight of every individual.
Consequently, the study of the factors that affect the size of national
production differs from the study for satisfying all the basic needs of all
individuals personally and completely.
The subject of study must be the basic human needs of man, as a human
being, and the study of distributing the wealth to the members of society to
guarantee the satisfaction of all their basic needs. This should be the subject of study, and
should be undertaken in the first place.
Moreover, the treatment of the poverty of a country does not solve the
problem of poverty for individuals.
Rather, the treatment of the poverty problems of the individuals, and
the distribution of the wealth of the country among them, motivates all the
people of the country to work towards increasing the national income.
The study of the factors that affect the size of production and the
increase of the national income should be discussed within the framework of
economic science, rather than in the discussion of the economic system.
e.
Scarcity of resources is not the problem and
human needs are limited.
Capitalism views the economic problem, which faces any society to be the
scarcity of commodities and services. It claims that the human needs are
steadily increasing, and the products continue to be too scarce to satisfy the
growing needs of the people. This view
is erroneous and in fact contradicts with reality. This is because the needs,
which must be met, are the basic needs of the individual as a human (food,
shelter, education, health and clothing), and not the luxuries, although they
too are sought. The basic needs of humans are limited, and the resources and
products, which they call the commodities and services, are certainly
sufficient to satisfy the basic human needs. It is possible to satisfy all of
the basic needs of mankind completely. The economic problem is, in reality, the
distribution of these resources and services enabling every individual to
satisfy all basic needs completely, and after that helping them to strive for
attaining their luxuries.
The basic needs of man as a human do not increase. The luxurious needs that may increase and
vary, due to urbanization improvement.
2.2
Practical Implementation
The discussion of the capitalist economic system leads to the conclusion
that the implementation of this system, over a period of time should lead to a
profound poverty and severe dissatisfaction of the needs of many individuals in
any society that lives under capitalism.
In this section, we will examine actual data from the contemporary world
that lives under capitalist economic system.
The data shows without any doubt that the theoretical errors of the
major economic principals have led to serious failures that cause huge
catastrophic effects on very large number of the population in the world.
2.2.1
Poverty and National Product
Figure 1 shows
the poverty numbers and rates in the
The GNP grew from
$400 billions to $10 trillions from 1959 to 2000. This very large increase in the national
product did not contribute to the resolution of poverty. More than 30 million people continue to be
poor.
Conclusion: Capitalism superbly increases the production
of products and services, and hence wealth.
It fails to resolve the poverty of the individuals. Number of poor people continue to be very
high.
2.2.2 Hunger under capitalism
Growing out of a Harvard School of Public
Health conference on hunger, The Physician Task Force on Hunger in
a.
hunger is a problem of epidemic
proportions across the nation;
b.
hunger in
c.
malnutrition and ill-health are
associated with hunger;
d.
hunger is the result of Federal
government policies; and
e.
present policies are not
alleviating hunger in
Source: The Physician Task Force on
Hunger in
http://hunger.tufts.edu/pub/hungeramerica.shtml
Conclusion : Resolution
of hunger and poverty require fundamental change at the level of the economic
system. Capitalism is designed to
produce poverty not to resolve it.
2.2.3 Globalization
Globalization is the newer form of global
capitalism. It is capitalism across
nations.
Capital flows between nations without serious
constraints. Products move from the
producing origins to consuming destinations without the feel of borders or
national barriers. Again, the production
of resources and wealth increase and multiply.
But the impact of the tremendous growth of wealth does not find its way
to satisfy the needs of the people.
Consider this report on globalization:
“The Scorecard on Globalization
1980-2000: Twenty Years of Diminished
Progress”
By Mark Weisbrot, Dean Baker, Egor Kraev and Judy Chen
For economic growth and almost all of the other indicators, the last 20
years have shown a very clear decline in progress as compared with the previous
two decades.
Among the findings:
Growth: The fall in economic growth rates was most pronounced and across the
board for all groups or countries. The
poorest group went from a per capita GDP growth rate of 1.9 percent annually in
1960-80, to a decline of 0.5 percent per year (1980-2000). For the middle group (which includes mostly
poor countries), there was a sharp decline from an annual per capita growth
rate of 3.6 percent to just less than 1 percent. Over a 20-year period, this represents the
difference between doubling income per person, versus increasing it by just 21
percent. The other groups also showed
substantial declines in growth rates.
Life Expectancy: Progress in
life expectancy was also reduced for 4 out of the 5 groups of countries, with
the exception of the highest group (life expectancy 69-76 years). The sharpest slowdown was in the second to
worst group (life expectancy between 44-53 years).
Infant and Child Mortality: Progress in
reducing infant mortality was also considerably slower during the period of
globalization (1980-1998) than over the previous two decades. The biggest declines in progress were for the
middle to worst performing groups.
Progress in reducing child mortality (under 5) was also slower for the
middle to worst performing groups of countries.
