The Financial Crisis, the Islamic Solution

This Book History of Economic Analysis, Joseph Schumpeter says that as far as economics is concerned the Middle Ages were desiccated and infertile. This is convincing, if you still believe in the myth that the wizards of European Enlightenment magically and single-handedly resurrected the dead science of philosophy, the empirical method, and all the arts from their ancient Greco-Roman crypts. The true story is the western historians of economics, much like their counterparts working on (or is it working over?) other branches of knowledge, systematically buried one little fact: The study of economics, like virtually every other area of scholarship, had its greatest advances in that seminally creative and superlatively human millennium, now reflexively dismissed as sterile. The learning promptly inspired incredible leaps of real economic growth in the world. But, surprise, surprise: Underlying it all was not a deregulation of revealed beliefs in favor of a natural balance of self-indulgence - the solution constantly being preached at us - but rather a systematic universalizing of monotheistic principles of ethical economics that profit the common man. It is the human connection with its religious conscience, and not unrepentant materialism unleashed, that ushered in this golden era of local gain and growth from a new global compact of finance and trade. It is a material achievement the world has yet to repeat – and for obvious reason. This period of unparalleled increase and relative international peace coincided perfectly with the moral leadership of Islam and Muslims in the world, and the containment of the Dark Aged distortions of religion in Europe. The correlation of the ascendance of Islam, a morally driven world economy, and the prosperity of the far-flung, culturally and religiously diverse localities that participated in it makes perfect sense. The proliferation of trade and fair spread of wealth (like the other arenas of life) absolutely require the moral refinement of man, a civility directly linked to a shared religious consciousness of principles in which all people can believe, be secure in, and benefits from. Thus at the core of this era of surplus resides divine revelation, the Qur'an and the Sunnah, or way of the Prophet Muhammed, sallallahu alaye wa sallam. The first speaks explicitly to the moral imperative of money. The latter details the kinds of transactions that institutionalize economic injustice. Being just in business, therefore became an essential part of belief, as the shunning participation in its excessive forms. This means that economics became part, not only of sacred knowledge, but of spiritual practice. This made Muslims, at the level of their local economies, both engines of economic justice (they were profoundly engaged in examining economic arrangement and instrument, which made them incredibly financially creative), and also formidable bulwarks against the spread of economic oppression (local economies and the cultures never lost their productive autonomy). This made local growers, craftsmen, and merchants always able to insist on or prohibit certain ways of dealing, giving them first – line responsibility for how they made their profit and guaranteeing them the immediate power not to participate, even in inadvertently, in victimizing others by unfair transactions or to corporate in creating veiled systems of slavery. Underlying these Godly economics is a single, immutable standard: No financial transaction must ever, under any circumstances, be allowed to lead to exploitation. S. Todd Lawry, professor economics at Washington University, has studied the economy of Arabia at the time of the Prophet sallallahu alaye wa sallam, and shown that a robust and transparent financial system existed there, based on the light of the Noble Qur'an and Prophetic traditions. The title of this important work Medieval Islamic Economic Thought: filling the Great Gap in European Economics puts this in rare and clear perspective. In it he explains that for centuries the Islamic economic code served as the core of a just system of international transactions anchored in three principles: (1) All economic practices and instruments were to meet the test of being, first and foremost, simultaneously good for the common human being, the human community as a whole, and the earth upon which they lived. (2) Every transactional method must equate with moral refinement, understood as obeying God, valuing the individual, and enriching the poor. And (3) all means of financial and economic exploitation were treason, a betrayal of God, the individual, the society, and the commonweal of man. Based upon these principles, Muslim philosophers developed solutions to inevitable economic complexities and specified instructions to ensure compliance with ethical economics in the light of the Qur;an and prophetic tradition. Lawry says plainly what Muslims have long known, the economists can no longer ignore the fact that it was these stalwart Muslim intellectuals who taught the world how to run decent trade relationship based on universal, moral codes of commerce.

EARLY MUSLIM CONTRIBUTIONS

"O you believe! You shall not consume one another's wealth by false means. But, rather, let there be trade with consent among your-selves. And you shall not kill one another (meaning here in pursuit of wealthy). Indeed, God is ever merciful" [4:29]. This Qur'anic commandment clearly and accurately underpins the moral bases upon which financial transactions should be conducted. Prophet Muhammed, sallallahu alayhe wa sallam, under-scored these principles in his instruction that trade had to simultaneously satisfy both seller and buyer to be lawful, and that this same principle of mutual approval and contentment is what validates employee-employer relationships. From the 8th to the 13th century, it was the international trade of Muslims, based on the ethics of the Qur'an and prophetic tradition that taught the world how to structure fair business deals across cultures and geography while keeping all the individuals in the transaction chain consensually free. Calling it the Medieval Green Revolution, scholars like John Hobson hold the evolution of Muslim business transactions to be the first true globalization of trade, thought unlike today's global dealings, it put local trade and the individual grower, craftsman, and merchant at the heart oat the heart of the new prosperity. Right from the primary generations after the Prophet, sallallahu alayhe wa sallam, there lived intellectual who, in the light of basic principles, defined changes in economic conditions related to the growth of the society. They also explained how Islamic laws should be put to practice in such circumstances. Among of these initial attempts are the economic fatawa (legal rulings) of Zaid ibn ali (122 Ah). The best of the economic analyses carried out during the time of the second generation, are the fatawa of Imam Abu Hanifah (150 AH), who scrutinized the complication related to the so called 'as-Salam' transactions of selling commodities on a predefined dated and a price based on a contract made earlier. In light of revelation, he drew out and clarified conditions for exdploitation-free As-Salam transactions. The fatawa of his contemporary ImamAbdul Rahman Al;-Qusai (156 AH) regarding laws of collective farming and protocol for partnership trading are also well-known. Imam Malik (179 AH) ash-Shafi's (204 AH), and Ahmed Ibn Hambal were all great scholars who analyzed the financial problems of their times and gave religious instructions in the light of the revealed Texts. The extensive letter that Hanafi scholar Abu Yusuf (182 AH) wrote the Caliph Harun ar-Rashid about agricultural relationshiop and taxation systems known as Kitab al-Kharaj, itself became one of the major texts analyzing evonomics from an Islamic perspective. ????Other scholars of the early years contributed to Islamic economics,. For example, Muhammad Ibn Hassan ash-Shaybani (189 AH) wrote about household income and expenditure. Yahya Ibn Adam Al-Kharashi (200 AH) analyzed laws related to the public economic sector. Al-Qasim Ibn Salam (224 AH) wrote Kitab al-Amwal as an examination of socio-economic affairs and Islamic law. Abu'I-Hasan al-Mawardi (450 AH), author of 'Al-Ahkam as-Sultaniyyah' wrote about market laws, agriculture, taxation, a and the responsibilities of administrators in these sectors. Abu Muhammad Ibn Hasan assessed financial affairs related to agricultural land. Nizam al-Mulk (485 AH) researched real estate transaction systems in the light of the revealed Texts. Imam Al-ghazali (505 AH), author of Ihya Ulum al-Deen, wrote about government influence over economic growth. Abu Bakr Al-Kasani (587 AH) did a analysis of profit and loss in partnership trading, according to the Qur'an and the Sunnah. Many other known scholars taught that agriculture was more important than trading, and that therefore these things should also be considered in taxation directives. Even Orientalists agree that Ibn Taymiyyah (728 AH) and Ibn Khaldun (808 AH), who lived in the 13th and 14th centuries, respectively, are the greatest intellectuals to have handled the theories and practice of financial transaction in Islam. Ibn Taymiyyah thought his various fatawa elucidated how the Qur'anic commandment "O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent" [4:29], could be made practicable in the market system of the 14th century. Ibn Khaldun, author of the Muqaddimah, or Prolegomena, praised as the greatest work on philosophic history by British historian Arnold Tonybee, is the person most eligible to be called the father of economics, according to I.M. Oweiss, in his aptly titled Ibn Khaldum, the father of Economics, Ibn Khaldun deals with a wide range of economic problems like price indexing, supply and demand of commodities, employment distribution, production, distribution and disbursement of wealth, wealth and the creation of private assets and economic growth, international commerce, population, public financial affairs, taxation systems, conditions required for agricultural growth, industries, employment and financial liabilities of administrators. It becomes evident from the narratives of the Muqaddimah how much importance the Muslim world attached to transparency in financial transaction, exploitation-free commerce, honesty in trade, and decent service-remuneration systems. Muslim merchants crossed the world doing business that adhered to the instructions of Muslim intellectuals who analyzed economic orders in the light of the Qur'an and Prophetic tradition. It was these traders who scientifically taught the world how commerce could be done decently. It was Muslims who controlled the course of global commerce between the 8th and 13th centuries. They helped people by reaching agricultural produces from various parts of the world to where there was lack and by teaching them how to develop cultivatable land. It was Muslims who introduced the world to India's mango, rice, cotton and sugarcane. It was Muslims who spread China's citrus fruits and Africa's essential sorghum west and east, according to Andrew M.Watson's remarkable study "The Arab Agricultural Revolution and Its Diffusion," The Journal of Economic History. In addition, it was the Muslims who manufactured agricultural machinery and introduced them to other cultures. These are the five centuries known as the Muslim green revolution, during which time usage of water reservoirs, dams, water mills, water flow machinery and norias helped farmers elevate and distribute water. Muslims also accurately recorded and made available to tradesmen an amazing catalogue of agricultural produce and the commercial zones of their origination and proliferation in Africa and Europe, according to Jairus Banaji in "Islam, the Mediterranean, and the Rise of Capitalism," Journal of Historical Materialism. These records turned out to be a virtual guide to European colonialism in the "enlightened" colonialism in the "enlightened" centuries. Muslims traveled to the various known parts of the world for commercial purposes, and were almost universally welcomed, since they were known promoters of fair trade and local prosperity. No armies accompanied them, according to Subhi Y. Labib in "Capitalism in Medieval Islam," The Journal of Economic History, who observes that the first market economy was formed in the Muslim world. The core of that economy was the exploitation-free financial transactions based on the independent Dinar, a currency absolutely liberated from usury, representing a wealth based on Divine Law. At that time, trading companies, agreements, exchange documents, international trade relations, partnership trading, and active and passive partnership trading, and active and passive partnership trading all existed in harmony and in accordance with universal morality, free from exploitation. Producers and commercialists used to compete to make profits from this halal currency, and in finding more mutually profitable productive sectors. The market economy system was one that maintained a precise perspective on matters like debt, repayment, profit, loss, turnover, gathering, circulation and spending of capital, and so forth. Regulations related to loans and repayments were fail-safe, free of interest, and, therefore, free from exploitation . Though trade, commission, vendors, brokers, currency, loans, profits, losses, trade agreements, and transactional documents all existed, there was no widespread exploitation, speculation, or gambling. This was due to the involvement of the political system based on precise divine teaching, at least when it came to commerce. Rare was the chance for indirect or hidden exploitations to gain a foothold in an interest-free financial order based on universal guidelines of monotheistic morality and an independent currency system. In short, it was the Islamic economic system that taught the world how international commerce should be conducted. Commercial exploitation was started by European powers that acquired commercial rights from Muslims through deception and fraud. Colonialism is, in fact, a global history of deception, treachery, and persuasion by forced and vice. From the 15th to 19th century commercial endeavors in the world were largely been based on militaristic imposition of weaker, exploitable nations. The aim of business laws in the exploited world seems to be to legalize stealing from compliant rulers in either occupied or controlled countries. Modern economic science, in fact, begins its life as a rationalization at the time of colonization. It smells of the very blood of exploitation. All the laws of interest-based economics ultimately teach how to exploit people in stark contradistinction to the Islamic economic system that preceded it, which was overtly focused on the benefit and wellbeing of people. It has the fragrance of humanity. The Islamic economic order established on the foundation of divine teaching has as its open objective the happiness, advantage, betterment, and refinement of the worker, the wealthy, the employer, the entrepreneur, one and all.

FROM TOP TO BOTTOM

Micro economics explains how financial affairs of the individual influence the society and state, whereas macro economics analyses how the financial integrity and laws influence the welfare and financial wellbeing of the individual. The analysis method of the former is from bottom to top; whereas the latter analyses matters from top to bottom. The Islamic economic perspective starts at the top. But unlike macro economics it does not begin with the society or state, but far above them, from the Almighty who created and sustains this whole universe. Everything in this universe belongs to Him, and it is to Him alone everything alone everything returns, the wealth and provision of each individual are all His gifts. Man only enjoys and experiences these gifts as blessing. Man is expected to utilize the wealth that Allah gave adhering to His regulations. Man only has the holding rights of wealth. He is only a trustee to act according to what the actual Owner of wealth has said is the responsibility of those given its holding rights: "And let those who find not the financial means for marriage keep themselves chaste, until Allah enriches them of His Bounty. And such of your slaves as seek a writ (of emancipation), give them such writ, if you find that there is good and honesty in them. And give them something (yourselves) out of the wealth of Allah which He has bestowed upon you" [24:33]. When man deals with the wealth given to him according to his own interest, he is sure to face its consequence. Some of the fallout he shall encounter in this life itself. But the actual outcome will be experienced in the Hereafter and how severe a penalty it can be! How one spent the wealth God granted him will have to be accurately accounted for before the One who gave the wealth. When produced and examined before the Lord who knows definitely and precisely about one's deeds and hidden objectives and intention of mind, nothing can be concealed, nor shall it be possible to get away with justification: "O you who believe! Spend of that with which We have provided for you, before a Day comes when there will be no bargaining, nor friendship, nor intercession. And it is the disbelievers who are the wrongdoers" [2:254]. The core of the Islamic economic system is the belief that all the given wealth is the gift of the Almighty. It, therefore, must be transacted according to His rules, regulations, and instructions. Whatever of this is not duly observed will be accounted for before Allah. Islam denies both the liberalist perception that individual freedom is most important, and the socialist perception that the state decides how citizens should conduct themselves with their wealth. Islam teaches that the citizen and the state should all follow the rules and regulations of the Creators. Only then do individuals get actual freedom and does society experience creative evolution. The basis of the liberalist perception that and individual has the right to transact according to his will and wish is the capitalist outlook that wealth is created by individuals on their own. According to the communist school of though, the citizen is robbed of his divine right to accumulate capital, which belongs to the state, or, more properly, to the collective. The concept of citizen's right over wealth is, to them, an illusion. Islam rejects both these viewpoints. God is owner, and delineator of all wealth's limits, transgression of which He Himself will judge and, if He so chooses, punish. This morality serves as the backbone of the Islamic economic system. Those who have not accepted it cannot make the Islamic system practicable.

ROLE OF MANKIND

Secular and material ideologies envision man as a complex creature fashioned during the mysterious evolutionary cycle of matter. Islam given the lie to this. Man is the Khalifah on earth. He is the unique living being having independent executive powers and authoritative liberties, whom God has endowed with all he needs to make use of the universe and influence nature. The word 'Khalifah' evokes all the designations of man on earth, like chancellor, successor, ambassador, steward, etc. Man is the only creature who can develop civilization by taking over the heritage of his predecessor and who can take up and execute and independent mission and represent his community as a whole. He has the ability to analyze acquired knowledge, compile it, reach new conclusions and examine those conclusions for truth. Because of this, he is able to advance knowledge beyond the sensory and achieve worldly improvement. Yet is only those servants of god who are able to identify the Lord and Master through sensory knowledge, attain wisdom through analyzing it, sanctify themselves by living according to His commandments, and who seek to purify themselves and others whom the Qur'an designates as the ultimate successors, or stewards.

LABOR AND PRODUCTION

Human discover resources, refine them, and produce new commodities out of them. It is manual labor that acts to render the resources of creation useable or productive. Products of labor reach us as useful commodities. That means the generator of wealth is labor. If we deduct labor from any commodity in our possession, it will be merely a raw material or beyond our reach. Physical and mental labors are equally important. Civilization are built when both of them are combined. Human labor is essential for the existence and progress of mankind. The human species cannot survive without it. Combined labor is more productive than individuals laboring on their own. When physical and mental labors are combined, technological growth is achieved and more products can be produced, though not necessarily of a better quality. To make more complex products physical are mental labors of a lot more people are required. What the entrepreneur actually does is unite these labors. The entrepreneur is one who organizes and utilize physical and mental labors to make the wealth available with him productive. He is the one who invests capital and uses his mental and physical faculties to make the conditions necessary for it to grow. The recompense he gets for that is the profit. Production does not happen by merely having laborers. Required conditions are also essential for it. In effect, the entrepreneur creates the required conditions. The truth is that he tends to labor more and endure much more mental stress than the laborers working for him. The entrepreneur remains in labor and related mental stress all 24 hours whereas a laborer works only a designated portion of the day. The entrepreneur must get proper recompense for his superior efforts. And such is profit. The primary unit of the economic system is one which includes the labor, entrepreneur, profit, and wages, It is by refining this unit that Islam builds the foundation for the comprehensive growth of economy. The Qur'an indicates that whoever is healthy should engage in labor: "He it is Who has made the earth subservient to you (i.e, easy for you to walk, to live and to do agriculture on it); so walk in the path thereof and eat of His provision. And to Him will be the Resurrection" [67:15]. The laborer has the right to justifiable wages. Prophet Muhammad, sallallahu alayhe wa slam, taught that preventing it is a sin and Allah shall not cause those who violate this to ultimate succeed. The Messenger of Allah, sallallahu alayhe wa sallam, said that Allah the Almighty said: "There are three whose adversary I shall be on the Day of Resurrection: A man who has sold a free man and has consumed the price. And a man who has hired a workman, has exacted his due in full from him and has not given him his wage" (Bukhari). Production is an important as labor. While referring to agricultural produce, the Qur'anic an stresses the fact that it is the blessing of Allah. "Who has made earth for you like a bed (spread out); and has opened roads (way of paths) for you therein, and has sent down water (rain) from the sky. And We have brought forth with it various kinds of vegetation. Eat and pasture your cattle (therein); verily, in this are Signs (proofs and signs) for men of understanding" [20:53-54].

TRADE AND CONSUMPTION

Trade is essential for products to reach people. The trader collects a variety of products from various places and delivers them to the consumer for a fee. He utilizes his wealth, intellect, and labor for this. His motivation is the profit gained from the business. But business is not inevitably profitable. There are chances of loss through faults in planning or unexpected problems. The trader is the one who takes the risk of loss and tries for profit. In society, circulation of wealth takes place through trade, Hence, trade itself is vitally important in economic science. The trader has the crucial mission of distributing (supply) goods according to the requirements (demand) of the society. And economic science is the study of individual and social processes affecting supply and demand. Islam allows and encourages trade. "Allah has permitted trade and forbidden Riba"[2:275]. The Messenger of Allah, sallallahu alayhe wa sallam, said: "The honest, trustworthy merchant will be prophets, saints, and martyrs on the Day of Judgment" (Tirmithi). If engaged in businesses that are not transparent, there is a chance of dissatisfaction for the trader or consumer after business is dome or agreements fulfilled. Therefore Islam has forbidden all non-transparent business dealings. Deals dome without accurate knowledge about the goods may cause discontent or difficulties. So Islam does not approve such dealing. The trader has the responsibility to ensure the quality and value of the commodity he sells. It is to clarify about this liability that Prophet Muhammed, sallallahu alayhe wa sallam, taught traders of foodstuff to inspect and measure before selling the items they buy. Islam teaches that all kinds of unfair trade are forbidden. The consumer has the right to have clear knowledge about the goods he buys. Modern society has started to talk about consumer rights only in this century, nearly 14 centuries after the Prophet established this as the God-given right of every human being. Business has to be cent-per-cent honest. Foul play in weights and measures has been condemned by god in the sharpest words. "No! Most surely, they (evildoers) will be veiled from seeing their Lord that Day" [83:15]. Islam has forbidden all kinds of speculation. The rise and fall of market share is caused by speculation. These days, the media are full of news about people who went bankrupt and found solace only in suicide. Prophet Muhammad, sallallahu alayhe wa sallam, prohibited all businesses based on speculation. Selling of baby camel in the fetal stage, transactions based on luck calculated by throwing stones, and trading of fruits before ripening were speculation-based trading that existed in his time. The ahadeeth show that the Prophet, sallallahu alayhe wa sallam, banned them all. The consumer has the right to withdraw from the deal if the goods bought do not have the promised utility of quality. The Prophet, sallallahu alayhe wa sallam, taught that there is no problem in returning a sheep one has purchased, for example, if, say, the seller had not milked it for an abnormal span of time before selling it, in order to show that it had higher yield per milking than it actually did. In such a case, it is clear that the purchase becomes irrevocable only after the buyer has milked it and been satisfied that its output accords with the representations of the seller. Thus Islam not only enshrines accurate business laws but establishes clear consumer protections, as well. Our preceding example shows that consumers have the right to gain the promised value of the goods they purchase or to return the goods. Not until 1962, did President John F. Kennedy deliver the first American promise of consumer protections, later known as the "Consumer ill of rights." These included the right to products that do not harm, the right to choose, the right to register complaints, and the right to accurate information. Nearly a quarter century later, the United Nations added four sub-clauses to these. We have already seen that Islam delivered these rights as divine revelation from its establishment. Yet it went beyond this, as well. In addition to regulating production and trade, it also put forth definite rules on the consumption side, the most important of them being that there must not be over consumption. "And give to take kinsman his due and to the poor and to be wayfarer. But spend not wastefully (your wealth) in the manner of a spendthrift. Verily, the spendthrifts are brothers of the devils, and the Devil is ever ungrateful to his Lord" [17:26-27]. It is part of the test of life that people in one place will experience scarcity while people in another have abundance. But extravagance, which necessarily leads to waste, is not at all natural. Americans alone waste $75 billion in food every year. Of the roughly 350 billion pounds of foodstuff that reach its affluent populace in food grains, milk, fruits and vegetables, nearly 100 billion of it gets tossed, much of it for the sake of ostentation (itself a major sin). Remember that Americans and Europeans, who together comprise just 12 percent of the world's population, consume 60 percent of its total production of foodstuffs. Hotels and clubs, establishments star-rated in accordance with their showiness, waste fully a third of this. If only 20 percent of the food squandered were methodically reused, the prevailing problem of poverty in the world could be seriously redressed. But Islam is not talking only of conserving foodstuffs, though this is a prime concern. The developed countries throw away serviceable goods of kind category. In 1998, the per capita consumption of oil in developed countries was 4,600 liters. In developing countries it was 670, and in India, a mere 360. While these figures have undoubtedly changed, it is not clear that its ratios have. This means that a citizen of a developed country burns up something on the order of 13 times the oil used by a citizen of India. There is a further lesson here. Abundance in one place causes scarcity in another. Dr. Amarty Sen mentions this in a study related to the famine in Bengal. It is particularly notable that the Qur'an says "spendthrifts are brothers of the Devils," [17:27], criticizing extravagance. The most prominent cause in the charge sheets of all existing financial crimes in the world in ostentation or lavishness. It spoils individuals, families, the state, and all. The intestines of every human being have certain limits. Food cannot be consumed beyond that limit. The lifestyle of eating to the maximum and wasting the rest for the sake of indulgence is creating serious health problems in the new generation of America. In 2004, 23.6 percent of school students in America were overweight and 8.2 percent are obese. In Europe those numbers are 15 percent and 4.6 percent, respectively, In Africa school-going children and struggling with diseases and other miseries related to starvation. This means that capitalist countries, and the resource-rich nations they deprive, are all having a tough time because of inequities and health problems created by consumerism. "Spendthrifts are brothers of the Devils." What a proper Qur'anic statement! Prophet Muhammad, sallallahu alayhe wa sallam, said: "Satan is present with any one of you in everything he does. He is present even when he eats foods. So if any one of you drops a mouthful he should remove away any debris from it and eat it and not leave it for the devil. And when one finishes (food) he should lick his fingers, for he does not know in what portion of his food the blessing lies" (Muslim). It is not population explosion but over consumption that is behind all ecological problems. The earth has enough provisions for all organisms. The existence of these provisions gives to creation all that it needs, There is an argument to be made that, other than man, no organism is capable of over consumption, in the sense that all creation gives back to the ecosystem as much as it takes. Thus whatever the population, their existence does not destroy the environment. Therefore, it need not be burden for the earth to accommodate a thousand times the present population, provided each one consumes no more than what is essential. But that is not the case with over consumption, which takes from the earth many times what it gives back. This disturbs the rhythm of the ecosystem and wrecks the environment. All our climate, water, and soil problems are caused by over consumption, destroying the balance created by Allah. Otherwise surely there would not be a problem, whatever the population. Allah said: "And the heaven He has raised high, and He has set up the Balance, in order that you may not transgress (due) balance. And observe weights with equity and do not make the balance deficient. And the earth, He has put down (laid) for all creatures. Therein are fruits, date palms producing sheathed fruit stalks (enclosing dates), and also corn, with (its) leaves and stalk for fodder, and sweet-scanted plants" [55:7-12].

THE RIGHT TO WEALTH

What Islam teaches is that the ultimate authority of wealth is Allah and man is given its holding rights. Whoever has the wealth has the right to decide how it should be spent. But that right has to be exercised subject to the divine rules and regulation. Otherwise, he will encounter difficulties in this life and risk severe punishment in the Hereafter. The right over the wealth each of us lawfully earns belongs to its earner with the exception of what is due the poor. This belongs to them, having been invested for them by God with us. As to this right, Allah has admonished us: "And wish not for the things in which Allah has made some of you to excel others. For men there is reward for what they have earned. (and likewise) for women there is reward for what they have earned, and ask Allah of His Bounty. Surely, Allah is Ever of All-Knower everything" [4:32]. The Islamic viewpoint is that both men and women are entitled to earn wealth and the right over the wealth so earned belongs to whoever earned it. The western-European world began institutionalizing this right of women only in 1870. Until then, the husband had authority over a wife's wealth, earned, invested, or inherited. Only after the intense campaigns by a woman named Ursula Mellor Bright (1835-1915) was the law of Married Women's Properties Act' instituted in Britain. The act said that "the salary, wealth and all earned by a woman independently is treated as hers." In 1882, it was amended to read that "the complete right over all of her wealth belongs to herself." This means that capitalism had to be forced to cede the rights God gave to all women more than 12 centuries before. Islam rejects the socialist school of thought, which obstructs human advancement with the reprehensible idea that all earned wealth belong to the state. Nor does Islam recognize the morals of the liberalist philosophy which make the individual believe that the wealth he earns is created by his ability alone, and thus he may spend it as he likes. Islam teaches that the wealth given to one belongs to his or her respective selves, but it one's responsibility to spend it adhering to the rules and regulations of the God who gave it. Between socialism which obstructs advancement and liberalism which turns it into madness, Islam accepts personal increase, but regulates it in accordance with authentic divine guidance. What Islam teaches is that personal wealth is not evil, but its spending should adhere to the restrictions of Allah, who blessed us by providing it. The Islamic directive is that however rich a man may be, after his death the inheritance should be shared among all the heirs according to their rights. Islam does not permit the code of "Manu," which allows only the eldest son to be the inheritor. The Qur'an also amends the Biblical law that only male offspring are entitled to inheritance, (Deuteronomy 21:15-17). The Qur'an teaches that both male and female have predetermined rights over inheritance. "There is a share for men and a share for men and a share for women from what is left by parents and those nearest related, whether, the property be small or large – a legal share" [4:7].

LOANS AND INTERST

Not all people in society will be financially self-sufficient. Indeed, according to modern economic practice, almost no one can or shall be. The system depends upon our dependence and the necessary insolvency of steady stream of unfortunate ones. Loans, defined as an asset provided by one who has wealth to one who does not, are a legitimate instrument to bridge the gap between our material objectives and our personal wealth. A loan is the wealth taken for a period from one who has money by another who does not have money for a particular need. Giving a loan is a great social service and, therefore, Islam has encourage it. The Prophet, sallallahu alayhe wa sallam, said: "when a Muslim lends money twice to another Muslim, he will be rewarded for giving charity once" (Ibn Majah). The Islamic perspective is that loan affairs should be transparent, properly documented, and confirmed by witnesses. The longest verse in the Qur'an is related to loaning "O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him. So let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he owes. But if the debtor is of poor understanding, or weak, or is unable to dictate for himself, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witness, so that if one of them (two women) errs, the other can remind her. And the witness should not refuse when they are called (for evidence). You should not become weary to write it (your contract), whether it be small or big, for its fixed term, that it more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out on the spot among yourselves, then there is no sin on you if you do not write it down. But take witness whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of everything" [2:282] The borrower is liable to pay back the loan within the fixed period. Islam treats not paying back loans as a great sin. Even if the borrower becomes a martyr in the path of Allah, his loan will not be excused. Not repaying a loan is a serious offense. If someone borrows without the intention of repaying and fritters with it, Allah shall severely punish him. In this world and the Hereafter. Not repaying a loan when one has money is a felony. Such people ought to be punished. Giving loan is a service done by one who has wealth. Treating a service as a means to take advantage perverts the social perspective on service. Social services are not business. It is not something to be done expecting worldly benefit. Its aim should be to cradicate the dilemmas of the struggling one and thereby please the Almighty and be eligible for His reward. Islam disapproves of the scheme of turning a service into exploitation. For this reason, Islam loathes interest and courts it as great evil. "Those who consume Interest will not stand (on the Day of Resurrection) except like the standing of a person beaten by Satan leading him to insanity. That is because they say: 'Trade is but the like of Interest', whereas Allah has permitted trade and forbidden Interest. So whosoever receives an admonition from his Lord and stops consuming Interest, shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to Interest), such are the dwellers of the Fire. They will abide therein" [2:275] All the prophets taught their people to stay away from interest. The Qur'an states clearly that any people who, in spite of the admonitions of the messengers of God, consume interest will be punished. "…..and for their taking (of) usury, thought they were forbidden to do it; and for their consuming the wealth of the people by false means… We have prepared for the disbelievers among them a most painful torment [in the Hereafter]" [4:161] The Old Testament of the bible denounces interest strongly. From the Nicea Council, the first synod of the Christian world, to all the synods conducted till the 16th century, it was decreed that usury was forbidden. Church historian John Noonan records that Interest is something criticized by popes, prohibited strongly by three ecumenical councils and protested by bishops. First Protestants and then Catholics have deviated from this stand. Sharp comments against interest may be seen even in Vix Pervanit, the circular sent by Pope Benedict XVI to the bishops in Italy on 1 November 1745. Later this prohibition gradually faded away. It is lamented in Rerum Novarum, the circular published by Pope Leo XIII addressing Catholic bishops on the 16 May 1891, that usury still exists and perturbs people. When banks became; prevalent and people took the interest system, the Church also followed. The Church, thought expected to lead in morality, has a history now of following behind them. In the end, not only have they accepted interest, they became its beneficiaries and propagators. Here's the New Catholic Encyclopedia: "Nevertheless, the 12th canon of the First Council of Carthage (345 CE) and the 36th canon of the Council of Aix (789 CE) have declared it to be reprehensible even for laymen to make money by lending at interest. The canonical laws of the Middle Ages absolutely forbade the practice. This prohibition is contained in the Decree of Gratian, q.3, C. IV, at the beginning, and c.4,q.4,c.IV; and in 1.5, t. 19 of the Decretals, for example in chapters 2,5,7,9,10 and 13. These chapters order the profit so obtained to be restored; and Alexander III (c.4, "Supereo", eodem) declares that he has no power to dispense from the obligation.. Chapters 1,2 and 6, eodem, condemns the stratagems to which even clerics resorted to evade the law of the general councils, and the Third of the Lateran (1179 CE) and the Second of Lyons (1274 CE) condemn usurers. In the Council of Vienne (1311 CE) it was declared that if any person obstinately maintained that there was no sin in the practice of demanding interest, he should be punished as a heretic (see c. "Ex gravi", unic. Clem., "De usuries", V.5)…. "The Holy See admits practically the lawfulness of interest on loans, even for ecclesiastical property, thought it has not promulgated any doctrinal decree on the subject. See the replies of the holy Office dated 18 August, 1830, 31 august, 1831, 17 January, 1838, 26 March, 1840, and 28 February, 1871; and that of the Sacred Penitentiary of 11 February, 1832. these replies will be found collected in "Collectio Lacensis" (Acta et decreta s. conciliorum recentiorum); and in the "Enchiridion" of Father Bucceroni.)" The phenomenon Islamic history witness as to interest is quite the opposite. Prophet Muhammad, sallallahu alayhe wa sallam, was dispatched to a society submerged in interest. Many of those who embraced Islam attracted by monotheism were dealers of interest. It was by invoking theism and thought of life after death in their minds that Islam seeded its great revolution. It lifted people up from evils including interest. It was in the final speech associated with his Hajj ceremony that Prophet Muhammed, sallallahu alayhe wa sallam, finally declared interest as forbidden. He announced total exemption of the interest money owned to Al-Abbas (his uncle), and, in this was, wiped the evil called interest out of the society. The declaration forbidding interest that has had strongest influence in history reads as follows: "Allah has forbidden you to take usury (interest), therefore all interest obligations shall henceforth be waived. Your capital is yours to keep. Your will neither inflict nor suffer any inequity. Allah has judged that there shall be no interest and that all the interest due to Al-Abbas be waived." When this declaration was made, nobody in the interest-flooded society uttered a word. Al-Abbas did not head protestations thinking of the huge sum of interest owed to him being lost. They bowed to what the Messenger, sallallahu alayhe wa sallam, ruled based on Allah's teaching and liberated themselves from this evil. For the past 14 countries Muslims lived undertaking interest-free financial transactions. It was not behind people that Islam followed. Prophet Muhammed, sallallahu alayhe wa sallam, led at the front. He started by forbidding the interest owed to his uncle and the Companion trailed behind him. And billions of Muslims follow him even today. Islam stand against interest is very strict. And that stand is not to associated with it. What Islam teaches is that giving and taking interest and doing documentation for its deals are all evil. Jabir said that Allah's Messenger, sallallahu alayhe wa sallam, cursed the accepter of interest and its paper and one who records it, and the two witness, and he said: They are equal (Muslim).

CUURENCY SYSTEM

Since financial transactions take place through currency, the currency system wields one of the most decisive influences on the wellbeing of society. In light of Islamic law, which requires all transactions to be transparent and free from treachery, the currency system also has to be comprehensible to all and resistant to all kinds of exploitations. When assets are exchanged based on currency, knowledge about its required with those who exchange it.
The Prophet, sallallahu alayhe wa sallam, enlightened believers to stay away from all kinds of exchanges susceptible even to traces of interest. The Prophet, sallallahu alayhe wa sallam, said: "the selling of gold for gold is Riba (usury), except if the exchange is from hand to hand and equal in amount. Similarly, the selling of wheat is Riba (usury), unless it is from hand to hand and equal in amount. The selling of barley for barley is usury, unless it is from hand to hand and equal in amount. And dates for dates is usury, unless it is from hand to hand and equal in amount" (Bukhari). He taught in simple terms how to do interest-free exchanges in a barter system. He said: "Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand" (Muslim).
During his era, the silver Dirham of the Persian and the gold Dinar of the Romans were the coinage used in Arabia. These two coins are seen in the prophetic instructions related to zakah, which means Prophet Muhammed, sallallahu alayhe wa sallam, had accepted these as currencies.
Dinar and Dirham were used as of the official currencies during the tenure of Caliph Umar. In light of discovered documents from that era, the value of the Dinar has been calculated as 4.3 grams of gold, and the Dirhams, as 3 grams of silver. It is clear from the above mentioned words of the Prophet, sallallahu alayhe wa sallam, that the proportion of the values of the Dirham to the Dinar was 20:1. It was during the era of Caliph Uthman that Muslims started making their own coins. During the time of Abdul Malik Ibn Marwan, in 75 AH, the Islamic State officially minted both Dinars and Dirhams. These coins had inscriptions of "La Ilaha Illa-Llah" and "Al-hamdulillah" on one side and the same of the Caliph and minting date on the other.
It was gold and silver coins that prevailed in the Muslim world for 12 long centuries. These coins enabled them to trade beyond the oceans and in domestic markets alike. The world accepted these coins and having integrity of weigh and value on their own. And they developed the exchange system based on them. Financial theories presented by the Four Imams and intellectuals like Ibn Taymiyyah and Ibhn Khaldun were founded on gold and silver coin. Extensive analyses related to the coinage system can be seen in Ibn Khaldun's Muqaddimah.
It was during the colonial age that paper currency began to be used in the Muslim provinces. As in other countries, paper currency was representative as based on precious metals and thus the practice of its prevalent use was originated. And since paper currency could genuinely represented actual wealth in an interest-free financial system, none of the scholars had significantly opposed this change. They were made to understand that representative currency it what prevails all over the world, is most convenient for transactions, is based on gold and is quite essential for trade exchanges with other countries in the world.
The history of currency in modern Muslim countries is instructive. The story of Saudi Arabian coins begins with the minting of the Qirsh, a coin made of cupronickel, an alloy of copper and nickel, by order of King Andul Aziz in 1928. In 1935, the government minted silver riyals officially. In 1963, they minted bronze coins called Halalahs. The Saudi Arabian Monetary Agency (SAMA) was established inn 1953. From then on 'SAMA' used to prepare and distribute bank notes of denominations 10,5 and 1 Riyals for the convenience of Hajj pilgrims who arrived there. Though made for pilgrims, these bank notes were widely used for transactions in Saudi Arabia. The subsequent printing of bank notes of denominations 1,5,10,50 and 100 Riyals began in 1961. They quickly became widespread and, thus, were withdrawn from pilgrims in 1964. To internationalize the currency, it had to be brought into adherence with the eighth clause of the articles of agreement of the International Monetary Fund, in order to enter the Saudi Riyal into the Bretton Wood Treaty of 1944, wherein it became subject to the international regulations for currency exchange. With that, like the currencies of countries that recognized the Bretton wood Treaty, the Riyal also came to be based on the American Dollar.
Even then there was contentment that the Dollar was gold-based. But the situation changed in 1971. With the removal of the dollar's gold basis by the announcement of President Nixon on August 15th, the age of fiat currency had dawned. The term 'fiat' means that a currency has no value on its own, and represents no asset. It has nothing but and assurance given by its government (a fiat). It rests on nothing. Fiat currency is absolutely the reason behind the unprecedented financial exploitation we are witnessing today. It is the responsibility of scholars to examine in light of the scriptures how much credibility we can give to transactions based on fiat currency, which has no value of its own. When viewed in the light of Islamic laws that says there should be transparency in transactions and no room for exploitation, it is doubtful that there can be even a theoretical 100 percent validity in transactions conducted using fiat currency, which, again, holds nothing but the assurance of a state.
Even the validity of long-term loans based on inevitably deteriorating fiat currency is uncertain. An interest-free loan given in fiat currency will almost always turn out to be a loss for the loan provider. What is the point, then, of asking those who have money to do service by which they shall almost certainly endure loss. In truth, the idea of fiat currency itself against Islamic Principles. Today the word has already realized the necessity of creating a news financial order based on entries (currency) having intrinsic value. Mahathir Muhammad, the former prime minister of Malaysia, suggested such a system in 2001, but there has never been proper follow up. If countries that Allah has blessed with resources become ready for such a change, it will likely mark the end of their own financial dependence and go a long way toward extracting the fangs of imperialism from the jugulars of the poor nation. It would be a giant step toward resolving the economic crisis from which the world is now reeling, and the beginning of the march toward a crisis-free economic system.
Once any currency system returns to being gold-based, people will almost instinctually begin seeking to deposit their money in gold-backed and, therefore, interest-free, banks. Since the investment of the depositor will be dealt with on the basis of gold, he or she would not have to worry about the depreciation of wealth. Software programmed to denominated respective currencies according to current gold value will eliminate any technical problems. In these days of electronic money and online banking, it is comparatively easy to make all deposits gold-based. Institutions like the Islamic Development Bank can do much to make this kind of situation practicable. The world is demanding such a change and the theoretical source for that change is with Muslims. And only Muslims can organize it in a manner useful to all people. Moreover, Allah has also allotted to us more than sufficient wealth and the human numbers to accomplish this, if we had the will. If we become ready for the path, and alternative of incalculable moral and economic value to the current global plutocracy shall at once be opened to the people of the world, and there can be no doubt about their response.

SOCIAL WELFARE SCHEME

However attractive the economic vision of socialism my appear on paper, aide from the few who can connect with it face to face, it cannot be seriously considered as a practical, universal solution. The only thing Marxism and its socialist variations have ever accomplished on a large scale is a grand assumption, that all the suffering, poverty, and incurable diseases in a society shall cease to exist with the elimination of personal wealth. Marxism has never been able to recommend any scheme to end the difficulties of people enduring them.
The capitalist promise is not much better. Other than vaguely imagining that human destitution shall automatically disappear when the myth of "progress" is realized through the free market, its best spokespersons are unable to tell us how the existing free market system will be useful to the destitute in the interminably grinding interim. Here also Islam stands out. The natural products of its financial imperatives is the disappearing of hardship. The distinction of Islam is that beyond reminding with admonitions that genuinely help the poor, I is able to present an economic program that makes such help, not possible, but inevitable.
Zakah, obligatory alms, is one of the five pillars of Islam. A person who has wealth-defined tightly as anything above one's immediate reeds-cannot be a Muslim without giving zakah. The Prophet Muhammad, sallallahu alayhe wa sallam, said: "Islam has been built on five [pillars]: testifying that none has the right to be worshipped but Allah (alone) and the Muhammad is the messenger of Allah, performing the prayers, paying the zakah, making the pilgrimage to the House, and fasting in Ramadhan" (Bukhari). Lexically, zakah means growth and refinement. Zakah is the refinement of wealth, and this refinement causes financial equilibrium and social progress; thereby also cause the development of the individual and the society. It is the financial greed that leads men to grave sins most of the time. And zakah is a financial sacrifice. Therefore the zakah system throws away wealth-worship and selfishness and cultivates altruism and benevolence. See a Qur'anic verse that introduces zakah as an act that cleanses and refines man.
"Take alms from their wealth in order to purify them and sanctify them with it, and invoke Allah for them. Verily, your invocations are a source of security for them; and Allah is All-Hearer, All-Knower" [9:103]. ????Zakah is not a mere virtuous act as a charity that the rich gives to the poor; it is the right of the poor in the overall wealth circulated in the society. It is stated in the Qur'an as "For the beggar who asks, and for the unlucky who has lost his property and wealth (and his means of living has been straitened). And those who believed in the Day of Recompense" [70:25-26]. Also while mentioning the characteristics of a Muslim and explaining about agricultural produce, the Qur'an says: "And it is He Who produces gardens trellised and un-trellised, and date palms, and crops of different shape and taste (their fruits and their seeds) and different (in taste). Eat of their fruit when they ripen, but pay the due thereof (their zakah, according to Allah's Orders, 1/1 th or ½ th) on the day of their harvest, and waste not by extravagance. Verily, He likes not Al-Musrifun (those who waste by extravagance) [6:141].
If the society becomes willing to organize and distribute zakah based on divine commands, the problem of poverty could be almost completely eliminated from the world. Historical events of zakah being distributed to a neighboring country when there was nobody eligible, confirm this fact. Today capitalist countries have also started to ralize that a social order cannot go ahead without considering the poor. Their social security programs are meant for the poor who do not fall into the financial order. It is estimated that even in America where people troubled by over eating live on one side, there are about 35 million deprived. Social security programs are for helping and rehabilitating them. While trying to help the poor through such programs, the question of a capitalist citizen as to 'why help them?' has no answers at all with the state or the ideology guiding it. And it is not a theoretically proven or mathematically established "fact" that the poor should be helped for the sake of helping the free market.
Islam holds water here also. The very One who provides wealth has also stipulated that the poor have the right to a certain percentage of it, and they should be given it. When one follows this stipulation, his only aim is to please the Creator who provided it and to win entry in Heaven and His blessing. Since the only aim is to please Allah, this alms and other charity is given expecting nothing at all from whomever it is given to. Thereby not only does famine vanish, but social equilibrium is realized also, a social equilibrium that is essential for wealth to flow through the society without restraints. It is to generate this flow that modern economists are talking now about schemes of social equilibrium. Since the very inspiration of a Muslim to give zakah is the faith in Allah and the desire to please Him, small are the chances of any kind of exploitation coming into Zakah. Rather, it is social security in its truest, pristine sence. A real flow or wealth is generated in just this way. Thereby refinement and economic advancement are engendered. It was through just this kind of program that Muslim society became self sufficient to the extent that none were left to take zakah, during the reins of the Caliphs Umar Ibnul Khattab and Umar Ibn Abdul Aziz.

LEGITIMATE SOCIAL SYSTEM

There is a point that has to be made here. A good economic order can't come into being in a vacuum. It needs a suitable social order, a real community that believers in upholding what is right. The fall of Soviet Union is a prime illustration of this connection. It showed that when you go against man's economic nature all Allah created it, the social sphere cannot sustain itself. The Marxian vision of the social order naturally improving when the economic system is freed from personal wealth was, after all, baseless.
Today the world is experiencing the disasters created by the capitalist assumption that the main responsibility of the society is to facilitate the tranquil flow of wealth. Here is where the Islamic economic system really stood out, for Islam teaches us that social transformation has to come through refinement of the individual. So it is the responsibility of the social system to create a strategy for the development of individuals who, in every generation, renovate society. The viewpoint of Islam is that the change of convention has to come about through the change in people's state of mind. It stipulates that once there is a change from conventional worldliness to spiritual transcendence through individual refinement, divine laws are to be observed, and a social order based on justice and brotherhood is to be established.
In an Islamic society, the rulers and the ruled are all believers in the supreme authority of Allah and the world beyond. The belief that all deeds in this world shall be scrutinized in the Afterlife is what regulates the lives of both leaders and followers. This seriously diminishes the commission, if not the motivation, for criminal activity. Since the lives of the people in a transformed Muslim society are dominated by their belief in Allah, who knows both the secret and the overt, there is a far greater predisposition to sincerity in judiciary matters and even politics. Hypocrisy cannot easily emerge in force among a sincerely transformed people. So the chances of immorality in politics, perhaps the most tempting of worldly realms, is at least well checked, societies members, led by the free opinion of the religion's most proven 'ulama, constituting a potentially overwhelming counterbalancing force. The basic attempt of the rulers and the citizens shall be to achieve the blessing of God, becoming His earnest servants. This is the kind of social set up wherein justice prevails. Only by creating an exploitation-free economic order and righteous social order, can the world emerge from the cataclysmic crises it is facing today. Such an order, one that offers serenity, peace, and satisfaction to all of humanity, cannot be formed without the light of divine guidance. This requires revelation that can stand up to the test of being unalterably divine. Only the Qur'an and the Sunnah meet this criterion.
These scriptures contain solutions and directives for all the crises no sweeping humanity. And though not the exclusive property of Muslims, nor relegated to their merely human protection, they have certainly been placed by God squarely in the realm of our individual and collective responsibility for transmission and implementation. In other words, the charge of Muslims is to make them understood, practicable, and to uphold them with all our hearts, all our souls, and all our might.
This is no utopian pipedream. History itself has made clear that Islam's economic solutions and directives are practical, based on the human welfare of the most vulnerable among us, and bound to universally better the dire human condition. It is time the Muslims declared to the world, like Joseph, who by divine revelation, foresaw the coming famine: "Appoint me [High Minister] over the treasuries of the land. I am a good keeper, and well-knowledgeable [in these affairs]" [12:55]. If people blessed by Allah with knowledge of the principle sources of revelation, numbers, power, wealth, and humility in the face of His coming Judgment become ready for this, it will be the beginning of one of the great transformation of human history, for which man is surely due. It will be the beginning of an exploitation-free economic order and humane, locally driven globalization, returning man to his original post-Edenic state of collective stewardship and individual freedom.