Islamic Economics for a World in Turmoil: The Need for a Sustainable System
Prof. Dr. Monzer Kahf
15 June, 2020
Our world is in turmoil. The 2008-2009 financial crisis destroyed the lives of tens of millions of people around the world.
Can Islamic Banking Be a Solution for the Economic Crisis?
Can Islamic Banking Be a Solution for the Economic Crisis?
In the USA alone, millions of people saw their homes and properties repossessed by the banks and other millions saw their savings dwindling and evaporating in the finance markets, thousands of companies went bankrupt and closed.
Since then, the world economy has not really recovered.
Extreme poverty is widespread with very high unemployment levels especially among the youth.
Finding a sustainable job today is becoming very difficult, and millions of people are forced to leave their countries and migrate in search for work.
On the other side of the coin, recent statistics reveal that 26 individuals own wealth equivalent to the wealth of the poorest 50% of the world population. That is equivalent to what is owned by about 4 billion people!
Can you visualize that amazing imbalance?
What went wrong?
What is the real problem causing this turmoil?
The answer to this question can be found in the way the world’s global financial system operates.
In one word: it is a rigged gambling system that favors the rich and makes them richer and causes the poor to become poorer.
Towards Sustainable Socio-Economic Justice
The Global Economic Crisis – Steps Every Muslim Should Take
For justice to prevail in today’s world, the economic and financial system must be a fair, sustainable system to give equal opportunities for all people in society, rich and poor.
It is actually in the best interest of the rich that the poor escape the poverty trap, as the concentration of wealth is very dangerous for the world economy as well as its socio-political coherence.
If citizens living in poor countries are able to grow in wealth and prosper, they would not need to migrate to the rich countries in the north.
Rather than building new walls to stop this unwanted migration, we should focus on making them stay in their countries by helping them prosper in their own lands.
We need a new era of world reform that is based on a win-win approach, and this series of videos is meant to offer a glimpse of an alternative socio-economic model that could help us achieve justice and prosperity for all.
What Islam Has to Offer
Social and economic justice is a core teaching in Islam. Men and women should act as trustees, not real owners, of the wealth God has bestowed on them.
As such, they are required to use the wealth they have in a responsible way, that benefits not only themselves but also their societies, their fellow men and women and the world as a whole.
With clear ethical guidelines that prohibit earning without creating real added value and dealing with finance as a gambling process aiming at grapping other people’s money, Islam offers a comprehensive socio-economic system at the society’s level as well as at individuals’ levels, with operative instruments of its financial system, as summarized in the following features:
1- Free markets functioning on the laws of demand and supply and based on strong commitment to private ownership, economic freedom and private initiatives and creativity for increasing the wealth producing activities.
What is the Difference Between Islamic Loan and Riba?
What is the Difference Between Islamic Loan and Riba?
2- The financial system in Islam connects directly to the real sector of production and exchange. By channeling finance through real market contracts of sale on credit, leasing and venture contributions, it firmly establishes a simple but fundamental principle of justice that is “earning by owning wealth-creating assets or properties.” And by removing lending from the finance sector it eliminates any potential use of credit for non-productive activities such as pure speculation and debt circulation.
3- At the same time the Islamic finance system does not give room to virtual assets, virtual finance products or virtual transactions. It renders all the huge amounts of money, presently invested in the virtual markets such as options, non-spot commodity futures, credit and insurance derivatives, to the real sector of production and exchange to work on producing more goods and services instead of sticking in the virtual markets.
4- It also removes all harmful things from the basket of accessible things whether for consumption, production or finance. Harmful things are determined according to the state of scientific knowledge. For example, intoxicant of all their kinds, tobacco and any substance that is scientifically confirmed harmful to the human being or its environment are excluded from the finance and production basket of goods and services.
5- Entrepreneurship is at the Heart of the Islamic Economic System by requiring investors to always associate with owning productive morally-screened assets/goods as a condition to earn any return and returning all financial and human resource to support the real sectors of production and exchange away from all kind of virtualities.
6- Real Profit & Risk Sharing between investors and entrepreneurs for production and exchange activities, while at the same time finance is available for both consumers and producers by ways of credit sale and leasing as long as loans are avoided because they separate the finance activities from owning real value-adding assets/goods. In such a way that tightly incorporates finance with the real market.
7- The social Justice dimension of the Islamic economic system is expressed in revising and adjusting the functional distribution of income (and wealth) by incorporating income and wealth redistribution internal mechanisms. For income redistribution, the Zakah and Awqaf schemes aim at continuously redistributing income from the rich to the poor, providing a systemic approach to personal redistribution that takes into consideration the personal circumstances of individual human beings.
8- On the other hand, the inheritance system aims at continuously redistributing wealth in a manner that avoids wealth concentration in a few hands without affecting the size of the firm or fragmenting enterprises. By only distributing ownership right to all potential heirs.
Conclusion
The following parts in this series will give more details of each of these features and explain the main dimensions of the Islamic economic and financial model.
(From Discovering Islam’s archive.)
Facing the Tidal Wave of Unemployment
Suzana Nabil Saad, MA
14 June, 2020
You just graduated with honors and are as ready as can be for your dream job. The only challenge remaining, will you be able to find a job right away?
Facing the Tidal Wave of Unemployment - About Islam
Developing a Loving and United Community
Another scenario, you have a quite comfortable and interesting job, well-paid and secured; or so you thought! Before you know it, you find yourself laid off! What to do?
Unemployment is one of the major challenges of our time. It has financial, social, psychological and health complications. Adjusting to a very low income at times leads to homelessness, separation or divorce, chronic depression, drug and/or alcohol addiction, etc.
How can we deal with unemployment from a Prophetic emotional wisdom perspective?
What would Prophet Muhammad (peace be upon him) have advised us to do in such a challenging situation?
How Should a Believer Face the Tide?
It is not the manner of a Mu’min (believer) to lose hope and mentally break down or even resort to drug or alcohol addiction in times of hardship.
As tempting as it may be to try to evade the trouble by temporarily blocking out the mind with such behavior, it is more fruitful and promising to turn to Allah instead, asking for His mercy and aid.
For after all, Prophet Muhammad (peace be upon him) affirms that:
“Strange is the affair of the Mu’min (the believer), verily all his affairs are good for him. If something pleasing befalls him he thanks (Allah) and it becomes better for him. And if something harmful befalls him he is patient and it becomes better for him. And this is only for the Mu’min. ” (Muslim, 2999)
Tawakkul (Relying on Allah) and Tawaakul (Overdependence)
There is a clear cut line between Tawakkul (Relying on Allah) and Tawaakul (overdependence). The first thing you need to do if you are unemployed or laid off is implementing the Islamic manner of Tawakul (Relying on Allah).
That is, turn to Allah first and foremost and ask Him to provide someone as a medium to help you find a job. That is, you must have complete faith and trust that it is only Allah that will send you your provision:
And in the heaven is your provision and whatever you are promised. Then by the Lord of the heaven and earth, indeed, it is truth – just as [sure as] it is that you are speaking. (51:22–23)
On the other hand, be careful not to fall into the trap of tawaakul (overdependence) on others. Do not lazily depend on others to provide for you.
turn people
Who To Turn To For Relief? Allah or People?
One day Prophet Muhammad (peace be upon him) noticed a Bedouin leaving his camel without tying it and he asked the Bedouin:
“Why don’t you tie down your camel?”
The Bedouin answered:
“I put my trust in Allah.”
The Prophet (peace be upon him) then said:
Tie your camel first, then put your trust in Allah.” (At-Tirmidhi, 2517)
You are the one going through the trial, so you need to start taking action yourself to steadfastly get through it. Present your resume to various job openings you feel match your field of expertise.
In case you got laid off, connect with your previous co-workers or other workers of acquaintance, so they can put you in touch with workers in other companies to help you get a job.
The Upper Hand is Better than the Lower Hand
Sometimes unemployment may present a bigger challenge, when you are unable to find a well-paying job or one that matches your field; like for example if you are a white collar worker and you find yourself only able to find blue collar jobs.
Assess the situation, if you have just started your search wait and try to find something that suits you. However, if you have been out there for an endless time you may need to understand that it is better to take this opportunity rather than presenting a financial burden on others or living under very harsh conditions.
It is more honorable having a job even if it may rank lower than your previous job or education level, than having no job at all and living on charity.
Abu Hurairah is reported to have heard Prophet Muhammad (peace be upon him) as saying:
It is better for one among you to bring a load of firewood on his back and give charity out of it (and satisfy his own need) and be independent of people, than that he should beg from people, whether they give him anything or refuse him. Verily the upper hand is better than the lower hand, and begin (charity) with your dependants.” (Muslim, 1042)
Free Time?
I'm Jobless, but I Need to Get Married
Ibn Abbas reports that the Prophet (peace be upon him) said:
“There are two blessings which many of the people lose: Health and Free time.” (Al-Bukhari, 6412)
As much as unemployment is an unfavorable condition, however if utilized wisely a fruitful outcome could be achieved. As strange as it may sound, free time that you possess while searching for a job could be a time that you could still develop intellectually, spiritually and humanely.
While searching and supplicating to Allah to give you a job, try to attend free job training courses to improve and increase your skills that will benefit you in your chances of finding jobs.
You also have the privilege of spending more time at the masjid and learning your religion while uplifting yourself spiritually. Now, it is also a very good time for volunteer work, whether it be at your local masjid or even in any other facilities, like libraries or schools for example.
Never Compromise your Faith
At times, you may have the conviction that it is your Islamic faith, for example your name or the fact that you pray at work, or your dress code as a Muslim woman, etc. that is keeping you from getting a job or got you laid off.
Whether it is true or not, do not fall into the trap of compromising your faith to reach your goal. Have trust in Allah and know that The Almighty will always give you a way out.
{And whoever fears Allah – He will make for him a way out. And will provide for him from where he does not expect. And whoever relies upon Allah – then He is sufficient for him. Indeed, Allah will accomplish His purpose. Allah has already set for everything a [decreed] extent.} (65:2–3)
May Allah aid you and guide you through your trial, and keep in mind that there will always be a light at the end of the tunnel.
(From Discovering Islam’s archive.)
