La Ribawi/Zakat-Based Economy
One of the most fundamental principles of Islam is justice; justice to Allah by not committing shirk and worshiping anything other than Him; and justice to each other by establishing the Divine Shariah Law and by treating each other as we would want to be treated ourselves. It is reported that the Prophet said: “As you would have people do to you, do to them; and what you dislike to be done to you, don't do to them," (Kitab al Kafi) and "None of you [truly] believes until he wishes for his brother what he wishes for himself.” (An-Nawawi Forty Hadith)
Imam Ali said, “O' my child, make yourself the measure (for
dealings) between you and others. Thus, you should desire for others
what you desire for yourself and hate for others what you hate for
yourself. Do not oppress as you do not like to be oppressed. Do good to
others as you would like good to be done to you. Regard bad for yourself
whatever you regard bad for others. Accept that (treatment) from others
which you would like others to accept from you... Do not say to others
what you do not like to be said to you.”
—Nahjul Balaghah, Letter 31
One of the most important ways we can act justly toward one another is by establishing economic justice. This means paying fair wages, and not delaying payment. Hadrat ‘Abdallah bin ‘Umar (may Allah be pleased with him) reported
Allah's Prophetic Messenger SAW as saying, "Give the worker his wages before his sweat dries." (Ibn
Majah). Allah SWT has also prohibited Riba and Gharar because these work an injustice on people. (If Allah SWT gives us life, we will explore this issue in more detail). Allah SWT also prohibits hoarding because this takes money out of the economy and prevents others from being able to use it.
And let not those who hoard up that which Allah hath bestowed upon them of His bounty think that it is better for them. Nay, it is worse for them. That which they hoard will be their collar on the Day of Resurrection. Allah’s is the heritage of the heavens and the earth, and Allah is Informed of what ye do. Al Imran 3:180
And let not those who hoard up that which Allah hath bestowed upon them of His bounty think that it is better for them. Nay, it is worse for them. That which they hoard will be their collar on the Day of Resurrection. Allah’s is the heritage of the heavens and the earth, and Allah is Informed of what ye do. Tauba 9:34-35
Capitalism v. La Ribawi/Zakat Islamic Capital Flow Economy
Capitalism is currently the prevailing economic system in the world. The only alternative economy, the state-run, socialist/communist system has now virtually disappeared from the earth; a failed experiment. There are various reasons why this system failed, not the least of which was the failure of this system to produce the model altruistic workers paradise promised by its proponents. Instead, without the benefit of a moral system rooted in the belief in the One True God, the leaders became selfish, corrupt, and morally depraved. Just like the worst excesses of the oppressive imperialistic tyrannies of the past, the leaders of the Communist system hoarded all the wealth and left the beknighted workers with the crumbs.
A quick perusal of Falsafatuna and Iqtisaduna by Shaheed Sayyed Muhammad Baqir Al Sadr will give the reader a thorough understanding of the problems inherent in Communist system. But this great scholar also touched on the problems inherent in the Capitalist system. If Allah SWT gives us life, I would hope to build on this work and expand the critique of capitalism and exposition of the La Ribawi/Zakat Islamic Capital Flow Economic System.
Here, I will begin by bringing out a couple of important points.
1. Capitalism is based on the "creation" and accumulation of capital. Capital is accumulated by taking it out of circulation. Capital is "created" by paying people to take money out of circulation, so it can be used to loan out to other people, who will then pay more than they borrowed for the use of that money. This excess in repayment will then be paid to the people who took their money out of circulation, thereby taking even more money out of circulation.
2. Over time, the Capitalists invented more and more ways to "create" money, including options, futures, and securitization of debt. These fanciful inventions pulled more and more money out of circulation and into the hands of only a few people.
2. Over time, more and more money has been taken out of circulation and has ended up in the hands of 1% of the population. This super wealthy 1% are not consumers. They purchase specialty, luxury good; one of a kind, generally made by artists and such, and they do not purchase the mass produced products that fuel the economy.
3. Over time, the working and middle class, who are the producers and consumers of the mass produced products that fuel the economy, have less and less money with which to purchase products.
4. As more and more money is taken out of the hands of consumers, the system will eventually collapse.
So, like the Communist system, more and more money is hoarded by the wealthy and the real producers and consumers, who drive the economy, have nothing. Like the Communist system, the Capitalist system is collapsing and no one seems to know how to fix it. Instead, the economists are still operating under a "trickle down" theory of economy, where people were deluded into believing if the wealthy had more money, then it would trickle down to the masses. This would be fine, if the wealthy consumed, but they do not. So nothing trickled down, and the wealthy got wealtier, until now the entire economy is crashing.
One of the greatest stealers of wealth is Riba. It is important to define this term properly. Riba is not interest, although interest can be Riba. Riba is ill-gotten gains, illegal gains, as defined by Allah SWT. There are two kinds of Riba, Riba Al-Nisee'a and Riba Al-Fadl.
As part of my obligation to amr bi al ma'ruf and nahi anni al munkar, to enjoin the good and forbid evil, I must tell you about Riba al-Nisee'a. This is a form that most Muslims are unaware of and this is mostly because the focus of the Ulema has been on interest, and not this most deadly transaction.
Have you heard the ads where they say, "Ninety days the same as cash." or "No payments until 20xx." Many Muslims are lured into these transactions thinking that if they pay off the debt before it is due, they will pay no interest. Well, the Prophet has strictly said these kind of transactions are haram. This is the kind of transaction mentioned in the Qur'an when it forbids Riba, doubled and tripled. This is because if you fail to pay by the due date, the interest will accumulate, and compound at exorbident rates. This kind of transaction is Batil or invalid ab initio, from the outset. It is a haram transaction, even if you pay it off before the due date. MUSLIMS, PLEASE DO NOT BE LURED INTO THESE TRANSACTIONS. THEY ARE HARAM. TO PARTICIPATE IN THESE TRANSACTION IS A SIN!!!!
As for Riba al-Fadl, the Prophet SAW forbid certain transactions that Allah SWT has determined are unjust. These include transactions of like for like goods. For example, the Prophet prohibited bartering a larger quantity of poor quality dates for a smaller quantity of excellent quality dates (for example 5 deglets for 2 medjools). Dates must be traded for the same quantity of dates, and grain for grain, and gold for gold and silver for silver. Because gold can only be sold for the same quantity of gold, then money can only be sold for the same value of money. This is why interest is generally considered a form of riba.
In shaa llah, if Allah gives us life, we will explore this in more detail in the future. For now, however, we will mention the other major concern in Islamic economics, gharar. Gharar is uncertainty - any costs or component of a contract that is no specified definitely and hence, left uncertain and undisclosed. It is interesting to note that recent changes to the lending laws now require truth in lending and clear disclosure of all fees and charges.
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