5. AN ISLAMIC ECONOMY

 

 

 

In order to reconstruct an Islamic Economic System certain considerations should be kept in mind:-

It is Capitalism which brought about the Industrial Revolution. This is because the need to increase Profits requires that the Satisfaction should be increased and the Sacrifice should be minimised and this can only be done by a third factor, namely the investment of capital in the invention and utilisation of Techniques - ideological (such as in the sciences), oorganizational and material (technologies). This created a number of psychological, social and physical problems. Among these are conflicts due to competition; Materialism, Psychological and Social disintegration, the lack of coordination and control between the various aspects and departments of life; centralisation and the increasing size and congestion of cities and the psychological, social and physical diseases connected with this; the disintegration of the family and its effects on the new generation including neurosis and crime; nationalism and international conflicts; dispossession of the majority and the demoralisation, riots and civil disturbances; the widening gap between the rich and the poor and the consequent losses of opportunities, talents and welfare; control of the many by the few; environmental problems of pollution, exhaustion of resources and disruption of the ecological system.

In order to deal with some of these problems the Governments had to intervene, became larger in extensity (size), in intensity (power) and in cotensity (the number of aspects of life they controlled). Socialism grows out of this. It is an extension and becomes extreme in Communism. It is an anti-thesis, a reaction to capitalism. There is always a tension between the Private and the Public. This is because Governments impose their will, cannot deal with variety and have to standardise, and being run by limited human beings cannot comprehend and control all aspects of a totality without inconsistencies and contradictions. They always ignore some factor which causes unpredictable results. It is not, however, realised that between these two a third force has also arisen, namely the Societies. This refers to the great number of interest groups, charities and bodies organised on a voluntary basis. There are groups concerned with psychological and spiritual development, groups concerned with various academic and social matters and others concerned with environmental matters. A great number of people belong to these groups but there is no over all organization for them and this gives them little explicit or obvious political power. But their power must be very great since the members of these groups are in the industries and Governments and they also form separate Pressure Groups. Collectively they control a great proportion of the finances of a nation. There are, therefore, three kinds of Capital - the Private, the Public and the Social. The power of these Societies is likely to increase and some form of unity at a higher level will have to be created in order to ensure coordination between them. When this happens, government will be raised to a higher level.

 

The reason for thinking that these changes could come about is as follows:-

1. The increase in the psychological, social and environmental problems mentioned above.

2. The tension between the Private and the Public, the Community and Government which also reflects in the conflicts between Capitalism and Socialism.

3. The sciences and technologies which Capitalism and the industrial revolution encouraged are now themselves creating changes. The Industrial Revolution is quite rapidly giving way to what has been called the Information Revolution. It is based on the Computer and the Electronic Communications Network. The following effects are becoming obvious:-

(a) It creates Automatic Machinery which makes manual work increasingly redundant. The number of people required to run factories is decreasing, causing mass unemployment. Software written for computers is becoming sufficiently sophisticated to reduce clerical, office and administrative work as well as that of many professionals such as Doctors and Engineers, Administrators and even Scientists. It is, for instance, possible to let a computer do the diagnosis, calculations, and all work which can be reduced to routines. It is possible to consult a specialist doctor thousands of miles away over a television network. Surgery, too can be computerised. All this requires reduction in the general level of work or huge unemployment will result. Since the unemployed must be supported by taxing the employed, the maintenance of unemployment is absurd.

(b) The nature of work is changing in three ways. (i) It is impossible for the computer to do work requiring complex and adaptive socially orientated work such as nursing and managing. These remain labour intensive. (ii) Much of the work has been standardised and reduced to the manipulation of concepts on paper and electronics. This can be multiplied, requiring only few people. (iii) Gathering information, Research, Calculation, Planning and Commercial transactions can be done from at home and transmitted over the telephone. All this requires re-education and re-training and changes in the educational system. However, the speed of change is greater than the capacity to retrain the population, apart from the question of differences in ability. This appears to mean that only the few will have the control.

(c) Owing to the development of transport, communication and organization, business is done on an international scale. They have transcended the limitation to territory, nationality as well as culture and ideology. It is they who dictate culture, social and environmental conditions. These international companies cannot be controlled by Nation States. This is because the businesses can easily relocate their capital and operations to another country where conditions are more to their liking. The policy of Nations is, therefore, dictated by them. To control them Nations have to make inter-national agreements and combine into greater units. An eventual World Government is inevitable. This cannot be done without difficulties owing to national pride and prejudice, entrenched habits of thought and cultural differences. It is also dangerous and oppressive if it creates universal uniformity in which alternatives and variety cannot arise. It bodes disaster on a global scale since mistakes at the centre will apply world-wide and the possibility of alternatives is reduced. However, the means of transport and communication are producing a worldwide overall culture which will contain only local variations or subcultures.

There are social consequences due to these changes. Increasing leisure and transfer of work to the home could allow the strengthening of the family. On the other hand wide spread unemployment could destroy them even further. Increased leisure might lead to the cultivation and pursuit of higher values. The third force, the Voluntary organizations will grow more powerful and transform Politics. Or else greater leisure will lead to further degeneration owing to purposelessness and boredom. Better and more comprehensive education will be required in future in order to create more versatility. Else the number of the uneducated given greater leisure will have a greater disrupting effect.

The change in the nature of work means either (i) that there is more work for women than for men, and they will become the bread-winners and men have to take up the domestic work. (ii) or both will have to adapt to do the domestic as well as the public work equally. (iii) Or the women return to the home. It is the breakdown of the family due to the departure of the mother from the home which causes most of the social problems which necessitate the employment of these same women. But this has not proved an effective solution to the problem. The reversal of this trend can take place without adverse economic consequences. Nor are there adverse consequences if the number of hours worked per person is reduced rather than maintaining a pool of unemployed by taxing the few employed. Nor by increasing the general level of education rather than creating an educational elite. It is all a matter of organization. But this depends on the value system which people hold. Unfortunately, altering this is a much more difficult task. It is embedded in their World View, that is, in their religion.

There are three ways in which these problems can be solved:-

1. The government takes control. They can do this through (i) Taxation (ii) Legislation (iii) Creating special Government Departments to deal with the situation. They can, for instance tax Industries and transfer the money to the Societies. They can pass laws limiting the number of hours worked. This, however, has the limitations already discussed and they have lost control over the firms.

2. The Industries cause changes by taking care of all the needs of their employees - their housing, health, re-education and by creating greater versatility and diversification. This appears to be unlikely since there is little or no profit in this. Nor does it solve the problem of coordination since all the firms are separate units in rivalry and competition with one another.

3. The community takes power into its own hands through the various voluntary organizations or Societies. They will have to organize and coordinate their actions and modify the other two forces. The problem here is that they do not necessarily cover all facets of a society between them and each has only a narrow interest.

 

Islam, we have seen, is based on Unity and forbids the division into Three (4:171). We shall, therefore, suggest a method by which these three can be co-ordinated into a Unity. 

 

An economic system compatible with Islam will only be presented in outline, not in detail. The outline can be modified by further thought and the details can then be filled in through experience and experiment.

 

The First Principle should be this:- It is absolutely impossible to create an economic system which will be satisfactory to human beings unless it is based on Objective Truths.

The Second Principle is that an Economic system is a third factor reconciling inner psychological needs with environmental conditions. Needs and environments do not only refer to (i) material things, but also to (ii) social things such as friendship, family, children and to (iii) psychological things such as the need for knowledge, purpose, faith, love and hope, dignity, self-respect, self-determination etc. These are inter-connected and interdependent, and each may have the other aspects. A book, for instance is required for knowledge but arises from the cooperative work of many people and has a material basis.

The Third Principle is that these truths are sought, recognised and applied.

The Fourth Principle is that the seeking, finding and application depends on human capability and these should be increased. The Economic conditions will become satisfactory in proportion to this capability.

 

The system described assumes that:-

            (a) Objective truths are sought and recognized.

            (b) An Islamic community is set up willing to apply these.

            (c) That it is non-sectarian and non-exclusive and allows variety.

            (d) That the educational level is gradually increased.

            (e) That servitude is gradually abolished.

            (f) That there has been a parallel political development.

            (g) That there will always be a group of people who can and are capable of making intelligent modifications to the system according to circumstances.

 

The system has well defined aims and restrictions. The purpose of the Economic system should be:-

1. Psychological - To facilitate the welfare, self-fulfilment and development of all the people.

            (a) To re-establish the vicegerency, the objectivity, self-determination, self-reliance and purposiveness.

            (b) To encourage the creativity, initiative and responsibilities of the people, not to hamper them.

            (c) To encourage the pursuit of Knowledge and Wisdom, Compassion, and Ability.      

 

2. Social - To encourage cooperation, mutual help and united action.

            (a) To facilitate the pursuit and maintenance of higher objective values.

            (a) To strengthen the Family in order to ensure the future welfare and development of the race.

            (b) To redistribute wealth in a more just manner; to facilitate an equitable return for correct effort and equity in exchange.   

 

3. Environmental - To aid and enhance the harmony and development of the environment, and control the effects of pollution, wastage and ecological disruption. This implies:-

            (a) To create a congenial environment.

            (b) To live within the resources in an area, and its capacity to renew itself.

            (c) To increase the utility of existing resources.

            (d) To maintain a balanced state between the environment and the population. This means:- (i) the fulfilment of true needs, benefits for the people and the environment, rather than mere wants. (ii) Not to contract or expand the economy unnecessarily. (iii) Not to multiply technology unnecessarily. More efficient technology should replaces less efficient ones.

            (e) If economy means efficiency then it should mean (i) efficiency not only in production but also in distribution and consumption. (ii) It should take into consideration all costs and consequences, direct and indirect physical, social and psychological. (iii) It cannot have any meaning apart from the purposes it fulfils and ultimately apart from human welfare and development or that of the environment on which we depend.

 

All this means that Human Rights in the Western Sense where they are defined without considering (i) Psychological or Spiritual  (ii) Social and (iii) Environmental duties cannot be maintained.

People should, therefore, be educated to want what is valuable and beneficial. They should earn only when they perform an actual service and in proportion to that service. Greed, usury and gambling are forbidden. Though charity is encouraged and they may give and receive gifts or inheritances this means that there is a voluntary transfer of what one person has earned to another. If only that which is valuable is to be done then there cannot be freedom in the Western sense. Freedom means the ability to do good. The freedom to do evil is self-contradictory since evil can be defined as that which harms and disables. Even in the West it is recognised that people cannot be allowed the freedom to commit crime, to harm others. People should be free to do what is good. Freedom is, therefore, not the primary goal, but a means to an end. Neither human beings nor money are commodities and cannot be bought, sold or hired. It is true, of course, that if goods or services have a monetary value, then the skills which produce them or the means to acquire them will also have monetary value. But this is only so for those who have, and seek, control over other men and money. For the ordinary man money is a medium of exchange and he uses his own skills to acquire what is beneficial. Islam requires (a) the seeking of useful knowledge, goals and skills (b) regulation of affairs by cooperation, mutual consultation and agreement and (c) compassion, charity and mutual assistance.

Every company must set aside time for (a) Prayer, meditation and self-confrontation. (b) Conferences and meeting to discuss attitudes, relationships, policy and plans. (c) Work. In this respect the Japanese appear to be far in advance of anyone else which accounts for their success.

Islam, we have seen, requires (a) Service to a greater reality than man. (b) Community solidarity, the abolition of servitude and freeing of slaves. (c) Enhancement of the utility of resources. These things are inter-dependent. Man depends on his environment and his fate is linked with the welfare of the Cosmos. His affairs must, therefore, be regulated by objective Laws, that is, laws which conform to nature, inner and outer. The term slavery means the domination and control of one person over another. It militates against the vicegerency and community solidarity. It should, therefore, also exclude the employer-employee relationship. It requires both personal and public responsibility. It favours united action, contracts, partnerships, agencies and what might be called Industrial democracy. The abolition of usury, the institution of Zakah and the enhancement of the utility of resources also facilitate the unity of a community and vice versa.

Employment, promotion and dismissal of people according to the whims or self-interest of others will not be allowed. No one should be dependent on the whims or interests of another, having no control over his own affairs, actions and life, No one should be either responsible for, or entitled to, dictate the actions, opinions or conscience of another person. Each is responsible for his own. However, in so far as a person is part of, and dependant upon, a community, he has responsibility towards it, and the community has rights over the person. This requires that intensive education should replace coercion. The distinction between profit, wages and salaries should disappear.

There are three aspects:-

1. Rights -The people should be left free to exercisse and develop self-reliance, their own initiatives, creativity and responsibility. This freedom ensures the development of adaptability and adaptation to change.

2. Duties - No one has the right to suppress these qualities in others or to exploit others for their own benefit. On the contrary they have the duty to enhance these qualities in others and for the welfare of the community and the environment. 

3. If people are free then they will also be subject to the differences of abilities, the vagaries of circumstance, to changes in economic conditions, health, weather and so on. To overcome the problems so caused the Zakah has been instituted. This is administered by the Community, through its representatives who are answerable to the community. It is collected according to ability and distributed according to need without endangering the qualities mentioned above and connected with advice and help. This differs considerably from the Welfare State as found, for instance, in Britain or in Socialist countries in the following ways:-

It is not the State or its Bureaucracy which determines, bestows and administers welfare.

(a) This removes self-reliance and treats people as children rather than adults. They lose control over their own affairs and must rely on the decisions of someone else.

(b) The State is anonymous and there is no one who actually owns and is responsible for the resources, neither the people nor the government nor administrators. Therefore, waste is inevitable. People make demands on the State and take benefits as a right. Whereas the individual, including the administrator, is reluctant to steal from other individuals or to rely on their charity, they do not mind stealing and exploiting the State. It encourages many people to live useless lives without shouldering their responsibilities. This has had important widespread consequences including the Hippie culture, decline in morality including dishonesty, loose sexual associations, and illegitimate children and so on.

(c) The Bureaucracy is bound by rules and regulations and is an unintelligent machine. The rule makers, the administrators and the beneficiaries are all remote from each other. It is inefficient and ponderous and action takes a long time. It cannot adapt to the variety of individual needs or to change. It has no notion of justice. Thus many get benefit who do not need it while many who need it do not get it.

(d) It costs a great amount to collect the taxes, redistribute the money, equip and run the various institutions and pay the administrative hierarchy. All this is a total loss of money, resources, energy and man power.

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An Economic system has three aspects:- resources (materials, energy, information), work (extraction, production, distribution) and consumption. People organize themselves into Companies to deal with each of these. A Firm or Company can be looked at along 7 Parameters:- Ownership, Goals, Structure, Duties, Rights, Management and Control.

The economic unit is a Company. It provides (a) goods, (b) services or (c) facilities. It may consist of a family, several families, many unrelated workers, or a community such as a village or town. They may combine to form larger companies, or can be divided into smaller ones. The company can set up new sub-companies or contract out to other companies for the goods, services or facilities they may require. Each is semi-independent. That is, there must be consultation between the parent and daughter companies and agreements reached. The company should be wholly or partly owned by all who work in it. The Company is responsible for assessing its needs, supplying these and balancing its budget. Shares in it may also be held by other companies and the Community as a whole through its Local and General Governing body, the Assemblies. All the workers in a company should be considered partners in that company. The number of shares owned by the workers could be proportional to their qualifications (knowledge, skills, social function), but also to their contributions. This provides an incentive both to acquire higher qualifications and to invest. They are not paid wages. A calculation is made of the costs, C, (of the materials, services, facilities) and the amount needed for re-investment, I. The amount to be re-invested can be decided by the work force through its organization. This is deducted from the earnings, E, made by the company through sales of its products, services or facilities, giving the total profit of the company, P. P=E-(C+I). This is distributed among the shareholders. The payment to each individual will be assessed by the amount of work done, and the value of that work, and the share they have in the company. A certain minimum amount of work and payment should be guaranteed. All work above this level should be proportionally distributed to allow for fluctuations in sales. All individuals and companies are free to combine with others to form companies, as long as they have the qualifications required for the function of that company. A worker may belong to more than one company.

A combination of companies in a particular location may be called a village. The word, village, can also be used to denote a part of the town. Conversely, the word, town, may be used for a combination of villages. Towns organise in the same way to form a district, and these combine to form larger units and so on. Each of these is a Company. Thus, though schools, hospitals, industries, farms, shops, law firms, communication and transport firms and so on are Companies, they are all parts of the village, town, district or national Company.

There are no income taxes. This is because the companies collectively are responsible for all the work done by Governments. There is an agreement between the parent and daughter companies that a certain proportion of the finances of the daughter company has to be paid to the parent company for the services it provides. These can be regarded as taxes. The parent company may, of course, have shares in the daughter companies which provide it with its income. The national company, for instance, may wish to set up some kind of organization to fulfil a particular function and may have to provide the Capital for it. But it does not employ the workers. Having determined what they require and what the qualifications of the work force ought to be, it contracts the work out to a Company specially formed. The community or its Economic Department may, however, use taxes and subsidies to co-ordinate resources, utility and needs. This means that estimates are made of the total resources available, the needs and the relative value of the uses to which they can be put and then taxes and subsidies are applied to control intelligent production, distribution, research and innovation. 

New members will be admitted by agreement with existing workers. They will have to buy a share in the company. The price could be taken by instalments as deductions from their earnings. Or their qualifications could be regarded as entitlement to an equivalent number of shares. Thus benefits and risks are distributed. A share not only bestows the right to use and benefit, but also the duty to maintain. The share bought by new members increases the number of shares the company is worth. The word, Interest, will apply to the ratio of the shares a person has in a company to the total number of shares the company is worth. The result:- expansion by employing more and more people from whose work the employer makes his profit will stop, while development and innovation becomes everyone’s concern. There will be cooperation rather than conflict of interest, and there should be no unemployment but the ups and downs of fortune will be shared by all. An ailing firm will not close down because it is unprofitable to a single owner making all employees redundant, and stopping the production of things which may be needed. But the workers will be encouraged to voluntarily go to other firms, improve their own, or set up other businesses. The Company may appoint experts in the various fields of its activities, but they are share holders and responsible to the rest of the work force.

The goals of the company will be real Social Service. The earnings of the company will depend on this service because of the interest of the community, and the supervision of the Law. All businesses will need a License which should only be granted when it can be shown that they can provide social benefits, that steps will be taken to acquire adequate knowledge and skills to prevent environmentally or socially harmful results, and that the health and safety of the workers has been protected. There is no division between the Political and Economic activities. Nor is there a division between Industry and Education. The Company itself undertakes to train and re-train its work force. It is in the interest of the company to conduct research and develop its products. The company is also linked with the Educational system. Each can send learners and students to the other. The same connection exists between Industry and Health, and indeed between all other departments. Thus members of a Company may also be members of another company, and we get a network of links.

 The work of the Company is divided into various departments. Different kinds of expertise will be recognised, each having its own function. Management or coordination, finance, research, planning, design, sales, clerical and technical work can be regarded as separate functions. There is no justification for regarding one expertise as more important than another to be paid more highly. However, the duties of the workers will not be confined to particular departments. They should rotate in order to familiarise themselves with all aspects of the company. This gives them a comprehensive view of what they are doing, enables intelligent and coordinated action and relieves boredom. It also expands and diversifies experience, enabling them to adjust to changes. The labour force should be sufficiently versatile to apply themselves to a number of different functions as and when necessary. There should be no compulsion to work a certain number of set hours. It should be possible for a person to earn in accordance with his needs, so that no superfluity or insufficiency of income occurs. This will require more elaborate planning of work, but versatility should diminish the problems connected with flexibility as well as the unpredictability which occurs owing to illness, accidents and emergencies.

The larger firms will have to be organised on a hierarchical basis. However, a ‘pyramid’ structure in which the number holding the power and control diminishes the higher one goes, though it provides competition and incentives to promotion, it is also limiting due to the restriction of numbers. This makes competition vicious because the ascent of each person up the ladder depends on the death or demotion of those above him and the restriction or failures of colleagues. It depends also on the whims of those above him and on pleasing them and in ingratiation. Independence of conscience is, thereby, destroyed. This structure appears to have its origin in the Christian Church which obtained it from the Romans. The structure compatible with Islam is as follows:- Every worker has the right to expand his education and experience and to be promoted to a higher grade. The number of positions at any given level is not fixed, and there is no struggle for promotion. The firm can accommodate the youngest learners and apprentices. Ascent is not restricted and does not depend on trampling over others, but on mutual assistance. The value of the work, and hence remuneration for it, will depend on general agreement. It may depend on certain agreed criteria or the acceptance of an independent expert, perhaps from the Education Department. This value may be measured on a scale of 1 to 10, by increments of .5, for instance. This determines their grade. This will depend on four factors:- education, experience, inherent abilities and efforts made.

There must be difference in remuneration for three reasons:- (a) in order to provide incentives. (b) The more able can use wealth better. (c) The development of the economy depends on Capital, the availability of resources in excess of what they need merely to live on. A person does not merely have needs, but he may have goals. He might want to do something which is positive having a developmental effect. The word ‘Capital’ will be understood as referring to this extra resource, the word ‘investment’ to its use, and the word ‘profit’ to the result of this investment. They could apply to money, objects, energy, ideas, talents, efforts etc.

The present trinitarian distinction between owners, managers and workers, and hence between profits, salaries and wages should disappear. However, it is necessary to consider the following facts:- A person working for 10 hours can produce more than one working for 5 hours, but the output is not necessarily twice as much - the amount of work done must certainly be taken into consideration. But suppose one person working 10 hours produces something which can be sold for 100 mu, while another working for 5 hours can do the same. The utility of the work done differs between people. It is not, therefore, possible with justice to pay people equally per hour. If you do then there is no incentive to improve efficiency. The difference may be the result of skill and knowledge, or organization or machinery. These, therefore, have economic value, and so do those who provide them. If there are two or more people working cooperatively in a company, their shares of the total income must be different. If, however, no work is done, or the work is not effective and produces nothing valuable which can be sold, then none of these shares have any value. We must, therefore, speak about effective work, that which produces satisfaction.

From the consumers point of view, if a purchase produces no benefits or satisfactions, it is useless. He must also be able to distinguish between greater and lesser benefits and know how to utilise things and distribute his income accordingly. All this requires education, organization and may even require mechanisation just as production does. It is not possible to create an efficient economic system if it only serves the interest of the producer. The product then exists only as a means to provide an income to the producer and has no value in itself. In fact, however, the product can only have value according to the benefits or satisfaction it provides. It is necessary, therefore, that the economic system be run by consumers not producers. This is the reverse of Capitalism. The workers in an industry are, of course, also consumers. But whereas an industry is organised and specialised in its production, the consumer has generalised demands and is unorganized. It is not, therefore, possible for an economic system to be efficient unless the consumers also organise to form a central body which then controls all the separate industries in a co-ordinated way. This, however, produces a threat of dictatorship by the few who hold the power. The economic system is not, therefore, independent of the political system, which must also be changed appropriately. 

 

The workers must have the right to all information, consultation, participation and control regarding the affairs of the company. In larger companies these rights will have to be exercised through representatives. The workers form an Assembly which meets frequently. They can organise in suitable numbers and according to their various functions. to elect their leaders or representatives. Their voting rights may be proportional to their Interest. These leaders will form the Board of Directors. The Board will have a President who may be elected by the Board or the Assembly. Seats on the Board of Directors will also be held by representatives of the other share holders, namely other companies and the Community. The members of this Board remain accountable to the Assembly and the groups who appoint them, and must keep it informed. The function of this Board is to make policy and to oversee. They also appoint officers where needed to carry out various administrative or organizational functions. The management and running of the company is left to expert individuals, but they are accountable to the Board. Admission of new members, promotions, dismissals and disciplinary actions will be carried out by this Board on principles agreed with the membership. They have powers of enforcement according to generally agreed principles and procedures.

 

Companies can amalgamate, cooperate or divide into smaller companies. Individuals will be free to set up their own companies and invite partners selected by them as long as they obey the same general rules. The workers have the right to transfer themselves and their shares to another company if they wish. There can be no take-overs.

Companies thus organised can form higher organizations by sending leaders elected by each company. This forms Super-companies having their own Board of Directors. It will gather, co-ordinate and distribute information and offer advice. It could also be responsible for redistributing the work force where needed. The Company itself should be responsible for the training and retraining of its work force. Competition and cooperation should not then be mutually exclusive. Work can be contracted out to individuals or other companies. Government enterprises will also be contracted out to companies organised in this way rather than be directly controlled. Governments themselves could set up factories which could be hired out to independent companies.

Since it performs a public function, the company is responsible to the Local and ultimately to the Central Assembly. This means that the community has control, but within the framework of the Law. It may not produce or do anything socially harmful. It is always open to public inspection, and all its policies, activities, use of resources, organization, prices and finances are subject to scrutiny and modification by agents of the Central Assembly. 

 

The Company has three aspects. Its internal, horizontal and vertical organization.

I. It is internally organised in three ways:-

(1) It has a hierarchical structure as indicated above.

(2) It has the usual divisions or departments (purchase of materials, manufacture, sales, finance, research and development, clerical, personnel etc). They interact with one another and each has its own experts, headed by a Manager.

(3) It has a democratic decision making process.

(a) Organization - The whole work force (or a section of it if the firm is large) form an Assembly which meets periodically. The work of the Assembly may be delegated to a Council headed by a Chairman. The members and the Council are accountable to the Assembly.

(b) Rights - All members have the right to attend the meeting, to all relevant information, to question, criticise, put their proposals, discuss and vote.

(c) Responsibility - The Assembly is concerned with the economic needs, health and welfare and the education of the members. They elect the members of the Council, the President, the Directors and the Managers. Members of the firm can only be admitted, dismissed, promoted or disciplined by consent of the members. Directors have to consult with, inform and educate the members. Pay and conditions will have to be settled by agreement on rules.

 

II. . It has a horizontal connection:-

(a) With other firms, because of (i) supply of materials (ii) sale of its goods (iii) cooperation and consultation in work and labour.

(b) With other Departments e.g. Education, Health Law.

(c) The members of the firm belong to various societies or interest groups to which the members of other firms also belong.

 

III. It is connected vertically, upwards and down wards in the following ways:-

(a) The Chairman has a seat in the Local Government along with the Chairmen of all other firms. They, therefore, have a say in government as well as being obligated to carry out its decisions. All Local governments are organised in a similar way to form the Central Government.

(b) The workers belong to their own Unions which may be similarly organised, the Managers being their representatives in the higher body. They run an Employment Exchange.

(c) The Directors represent their firms or sections in the larger parent company or they organise together with the Directors of other Companies in the same way to form super-companies, and eventually the Bureau of Industry. This together with other Bureau such as those of Finance and Commerce form the Department of Economics. As they are partly independent no question of monopolies arises, competition remains in tact, but responsibility to the community is also assured.

 

There is, therefore no dichotomy between the governed and the governors, between owners and workers, between politics and economics, between private and public.

 

In future industries and factories are likely to become larger and larger and much more automated, requiring fewer and fewer people to man them. If these Industries remain in the hands of the few then there is likely to be increasing unemployment and the gap between the poor and deprived on the one hand and the rich and powerful on the other will necessarily increase. As the setting up of new Industries in competition is becoming increasingly more costly few new companies arise. The pressure to form monopolies is likely to become irresistible and governments are, therefore, likely to intervene more and more. This merely shifts the dictatorial power from Capitalists to Politicians. It is, therefore, essential and urgent that the people be invested with much more power.

It will be necessary to have some large scale industries to establish the infra-structure of the economic system, such as those dealing with materials, electricity and other sources of energy, food and water, public transport and machine tools. These should be community owned. This is not the same as State Ownership. They are run by private firms accountable to the community which owns the shares and has the supervisory power. Every member has the right to information and consultation. Variety and versatility will, however, be built into the system so that uniformity is avoided.

Industries making machine tools should concentrate their efforts in providing versatile small scale machinery and standardised parts which could be variously assembled and utilised by independent individual craftsmen, or small local businesses. It may, however, be the case that people could become independent of centralised energy sources, electricity, gas, oil and coal, if efficient methods can be found to utilise solar, wind and geophysical energy or other small scale sources of energy. Every house or housing estate, factory or industrial Estate could have its own energy generating plant using solar panels, wind or sea power, or geothermal extractors. A laboratory claimed that it could produce cold nuclear energy in a test tube. This claim was later withdrawn. The claim may or may not be true. This would have given everyone and all nations independence and perhaps even unlimited energy. It is, therefore, not at all unlikely that large companies and governments suppressed this discovery and associated inventions. This has happened before. A great number of inventions have been destroyed because they threatened the profits of those in power.

There is a tendency towards increasing independence from natural sources of metals through the invention of plastics, ceramics and other artificial materials. It is even possible to grow crops as sources of energy or use vegetable waste for energy. Materials and foods can be produced by cultivating suitable genetically altered bacteria and fungi. There is a need for independent research establishments financed by the Community, and for laws preventing the suppression of information. There should be no need for Industrial secrecy. The person or company making a discovery or invention can be paid directly from Central funds for this. Or the inventor could be given the right to charge a certain percentage of the price of each item produced. Indeed, Industrial secrecy must be forbidden by law as it prevents the free flow of information on which further development depends. It also causes unnecessary multiplication of the same research effort, and encourages anti-social abuses by the power knowledge bestows. No private property right to Knowledge, specially those of an employing firm, can be recognised. But this right will have to be replaced by other methods of encouraging and financing research. Those who finance the research could be regarded as partners in the enterprise and paid a proportion of the profits. However, the indiscriminate application of every invention is also harmful and should be controlled by the community.

Economic changes are likely to arise when energy sources run out or become expensive. This will encourage decentralisation of industry. Communication technology is making great progress, and it might soon be possible for office work to be done at home without requiring the movement of people to and from offices or shopping centers. This will save energy, reduce pollution and even strengthen family life. This tendency should be encouraged.

 

The shops, too, could be consumer orientated. People could go into shops to receive advice to fit their exact needs. The shops could be centers for testing goods, gathering information about what is needed, customer criticisms, comments and suggestions and feeding these to the manufacturers. Since the shops are interested in only the total profit they make from all the goods they sell, then they could determine the distribution of prices, reducing or raising them to ensure sales. Instead of advertisements which by pass the rational faculties, and depend for their effects on unpredictable variables, a “Directory of Goods, Services and Facilities”, similar to Telephone Directories, could be generally available. This would describe the specifications of each item, having been tested by an independent “Institute for Standards” which would lay down appropriate standards, tests goods, advise manufacturers and consumers, and ensure that goods are made as safe, reliable, efficient and durable as possible to prevent the wastage of resources. All methods and tactics of manipulating customers for personal profit by advertisers, publicity agents, shopkeepers, sales men and propagandists will be regarded as criminal offences to be severely prosecuted. Though the shops may specialise in certain items, or be themselves diversified, they could cooperate together and form an overall organization which coordinated information. The Community itself, through its Assemblies could control the shop or market by installing an officer. Or they could contract someone who could make bulk purchases and make regular deliveries. Goods could also be made to individual specifications. Manufacture should be determined by consumer needs, not the reverse.

There would then be a continuity of demand which simplifies calculation for shops and manufacturers. The shops would become centers of exchange and would know what is required in what quantities and when. They would place their orders to manufacturers accordingly. It would even be possible to make exchanges in cities other than those in which they were purchased. The customer would only pay according to the use he made of things. He would know exactly what his outgoings were. Having committed himself to, say, a car at so much per month, he would be assured of one for the rest of his life, or until he cancelled the contract. The individual could “travel light”. Travellers need not carry much luggage. They could obtain all their needs at their destination. This could apply also to clothing if these were designed correctly. Western clothing as sold in the large stores are already standardised to various sizes. But Eastern clothes are much more versatile and fit almost anyone. Though fashions in clothes appear to be a frivolity there is no reason why a variety of fashions should not be available. It should be possible for individuals to design their own clothes or anything else for that matter and to hire the machinery required to make them. Public Workshops and Laboratories could be established in the same way as Public Libraries and Gymnasiums, Conference Rooms and Community Centers. There should also be an “Institute for Enterprise and Innovation” which will encourage invention, ideas and projects. These can be paid for by Public funds and then made freely available.

 

Waste materials should be collected, sorted and sent to factories for recycling as far as possible. Goods require no elaborate containers to hide their quality and where needed could be standardised and re-used. Shops being centers for exchange could collect and send damaged goods for repair or recycling. Sewage, in particular should be utilised. In the past human and animal waste was always deposited on the fields where it rotted to regenerate the land. In the developed countries it goes through the sewage system into the sea. This causes pollution while at the same time depleting the soil, requiring expensive and less effective inorganic fertilizers to be added to the land. This generally seeps away, thereby not only causing further pollution but also exhausting the supply of fertilizers. In order to conserve space and energy, buildings and cities could be built mostly underground where they can be kept cool in summer and warm in winter.

If a society is organised on a communal basis where the principles of cooperation and sharing are applied, then the pressure on resources can be considerably reduced without appreciably affecting the standard of life. It is, for instance, a great wastage, in an individualistic society, when every nuclear household must have a separate kitchen equipped elaborately with all the latest gadgets which are seldom used because ready prepared and cooked foods are available in every supermarket and restaurants; a laundry and a stock of clothing, a Library of books; every individual or even every room in the house must have a television and radio; and thousands of cars must move in opposite direction each carrying a single passenger when it could carry four for the same price, or proximity to the place of work could make such movements unnecessary. It is perfectly possible to arrange housing into small convenient neighbourhoods into which community facilities can be built. These would have community kitchens, sewing rooms, libraries, laundries, entertainment centers, nurseries etc equipped to the highest degree available. There could be Store rooms containing a variety of crockery, utensils, tools, furniture and clothing from which individual households could borrow as need arises. There could also be guest rooms so that visitors from distant places could be accommodated and travelling made easier. It is also possible to have children’s playgrounds, leisure gardens and vegetable plots in every such neighbourhood. A good public transport system would make private cars mostly unnecessary. If cars were required for special purposes they could be hired from a local firm which undertook to keep and maintain an adequate supply. The design of cities and towns will have to change to accommodate these features. The pressure on resources in Islamic countries is also less than that in Western ones owing to a much smaller demand for furniture, cutlery, jewellery, cosmetics, and alcohol and other drugs.

All this is unlikely to appeal to people in the already prosperous nations. But in the poorer nations the fulfilment of the hope of achieving some measure of prosperity would be very remote indeed without some system such as this. 

 

All money should be held in Banks. Financial transactions would then consist of transferring numbers from one account to another. All purchases could be done through cheques and Credit or Identity Cards. There being no bank notes the problem of forgery should not arise. The Banks have to ensure that the Total income and outgoings of the company, nation or individual balances. Companies and individuals can adjust their work and earnings according to the statement of credit and debit which they receive from time to time. They can also borrow from, or invest through the Banks, without interest. One of the advantages of abolishing usury is to encourage investment by individuals and Banks so that Profits will rise and fall with the performance of industries. However, a charge for the services offered is legitimate. The Banks will be owned by the community or by private companies in which all the workers will have shares. The Investors, be they individuals or Banks will have a voice in the running of the companies in which they invest. The Banks will run Insurance Schemes, for unemployment, injury, death, and retirement pensions. All Banks could form an overall organization, or Central Banks which co-ordinate their work. All surpluses or deficits should be proportionally redistributed from time to time in order to keep the accounts balanced. This can be done through the Zakah. The Central Bank should have National Shares Company which invests in all public industries. Shares in this company will be offered to the public. This means that those who invest in buying such shares will share in the profit made by the whole of the nation’s industries. They will have a stake and an interest in the performance of the nation as a whole. These shares will also constitute their unemployment and sickness insurance as well as their pensions. It will be in the interest of this company to see that the industries run efficiently and to lend them money to do this if necessary. 

The fluctuations of inflation and deflation produce suffering and make the economic system unpredictable and uncontrollable. This can probably be avoided as follows:- The total amount of money (TM) is kept constant. All money units can be regarded as decimal fractions of this. Convenient units may be one millionth (Mil) of this, each divided into a further million (Bil). These can be divided into. thousands (Thou), which are divided into hundredths (Hun), and even further into thousands. Prices and incomes will then always be a fraction of TM and can be accurately compared. It also becomes possible to determine whether some new product or method of manufacture has more or less utility. The personal income of the individual (PI) will be a fraction of the Total Income, and the Average Income (AI) will be the Total Income divided by the population. This allows one to calculate the Zakah.

 

Each person should distribute his finances in three accounts:-

1. A Current Account used for daily expenditures.

2. A Savings Account which can be used in periods of unemployment or sickness. The savings collectively can be used by Banks through investment to provide Insurance. The Zakah is paid out of this.

3. An Investment Account. Every person is encouraged to have a stake in the nation’s properties and industries, its progress and development, by having shares. All taxes are paid out of this account.

 

The finances of the community or a society are similarly arranged.

 

Seven things are required for an economic system - knowledge, skills, work, resources, accommodation (i.e. space and time), organization, and enterprise. The last puts the others together. The Entrepreneur is one who provides the initiative and, but not necessarily, the Capital for every enterprise. The Development and progress of the Nation depends on him. Enterprise must on no account be stifled. But he must be socially responsible. All entrepreneur must pay to rectify the damage they do.

As usury is forbidden in Islam, Capitalism as found in the West could not have developed in Islamic countries. Yet capital is certainly required to build industry. Capital consists of money which is not used for the immediate satisfaction of needs but is used to purchase the conditions (machinery, raw materials and labour) required to produce the means of satisfying needs. Even trade requires the purchase of goods which have no immediate value, but which are required for sale. Agriculture also requires it. Banks will be able to provide the Capital and should collect information on investment opportunities. Islam also recognises the partnership between the providers of Capital and users of Capital on a profit sharing basis. Banks could undertake this function on their own behalf or that of their clients.

Ever since there has been a market economy people work not in order to satisfy their immediate needs, but to produce goods which they can exchange for the things which produce satisfaction. When money is spent to buy goods or machinery and these are hired out for Profit, it may be argued that though the person does no work in return for what he earns, he does provide the service of making available for others the use of machinery which they could not otherwise afford. A fee for this service is not inappropriate. These goods wear out in use. It is perfectly possible to achieve this kind of service by a modified method of what is called Hire Purchase or payment by installments. Hiring out things which do not depreciate while ownership is retained, however, is akin to usury. Each usable item has a life span from the date of manufacture to the date when it is worn out, depending on the intensity of use. The utility of that item is proportional to its durability and versatility. The price of the goods could be distributed over their life span, plus a charge for administration. Almost all goods could be sold in this way. This has several advantages. The customer could simply obtain an exchange whenever he needed or wanted one. It facilitates calculation and planning.

 

The organizations of Industries, Banks and Retailers together form part of an overall Economic Department, which transfers information, coordinates their work and makes recommendations. This organization is itself accountable to the community through its District and Central Assemblies of which it is a part. The organization of Industries or of Retailers and Banks brings the danger of forming cartels and monopolies. But as everyone is employed in these, and all have a say in running affairs, the dangers associated with this would be minimised.

As every economic unit must deal with needs, production and finance, these three functions should be separately organised, though they need coordination at a fourth level. Accountants, for instance, who deal with financial balances should not interfere with the methods of production or with determining needs, and they should not interfere with each other. But there must be a supervising body which determines the overall policy and this must consist of the representatives of all three.

 

If the economy is to be controlled and equity in exchange is to be maintained then no gambling of any kind can be allowed, including that on stock exchanges. This does not mean the abolition of the stock exchange but control on its practices. The buying and selling for the express purpose of manipulating prices cannot be allowed. Profits can only be allowed on that which provides some service proportional to the benefits. This includes investments, production and distribution by merchants and shops. It is true that the value of shares does fluctuate and that they can be bought and sold since they represent the equipment of a company. But these do not last forever and the value of the shares would decline unless they were constantly replaced. Under the system proposed here the cost of replacement would come out of the profits. On the other hand if a company expanded then this would involve an increase in the number of shares. The price of shares would always reflect their utility.

The purpose of the economy should be to create local self-sufficiency at each level. The exports and imports of a community should be coordinated centrally. There should be no imports which cannot be paid for by exports, and only surpluses, which may be specially produced, should be exported. This means that the community has the right to control the export and import activities of firms.

 

One of the fundamental economic ideas in Islam is that property is a Trust. It is a right to use not of ownership. Those having control are tenants with responsibility. This may be justified as follows:-

(1) We are told and can see that human beings arrive on this earth without anything and leave without anything. Nothing on earth can, therefore, be said to belong to them. The land and its resources, the air and water and the heat and light of the sun are freely given to man without any work on his part.

(2) The Quran and other scriptures also tell us that man is entitled to what he earns by his works, to the products of his labours. We can see the Justice in this. This cannot apply to the resources of the earth. We can see quite clearly that work has to be done to satisfy any need. Therefore, if some people are idle it must be because others are doing the work to satisfy them. This could either be because of charity or compulsion.

(3) All human beings are equal before Allah, this cannot be so if some people are deprived of the resources they need, and become dependant on others.

(4) We are told that human beings should be self-reliant, autonomous and responsible for themselves, their dependants and their environment, and that they have a duty to recognise and respect the autonomy of others. This cannot be discharged while they are controlled by others. Human beings are described individually as well as collectively as Vicegerents, who are to be subservient to none but Allah.

(5) We also know that there were many communities, the Africans and American Indians for instance, who had no notion of personal property. It cannot, therefore, be a law of nature or of man.

(6) However, all human beings are dependant on the environment, the land and its resources, energy as well as information.

(7) It is evident to almost everyone that the poverty and injustices on earth is created by the fact that a small group of people have control of most of the land and resources of the world. They, therefore, control others through this. This accumulation of property has not been achieved by their own work but by past military conquests and exploitation. 

 

If the notion of Trust is to be implemented then:-

(1) We must regard all land and its resources as a gift to the whole community. It is not owned by an individual, company or government. 

(2) This is administered for the community by their representative, the Head of the State.

(3) This administration can be done through an Agency for Land and Resources in the Department of Economics. The task of this Agency is to assess, find, manage and allocate resources in the most beneficial manner.

(4) A distinction should be made between private property, communal property, and company property which is used for industry and trade by those belonging to the company. Property means control over resources.

(5) Personal property is for the exclusive use of a person and his dependants, can be used as he wishes and can be sold, given as a gift, or inherited.

(6) All communal land is freely accessible to the public, and can be worked on by agreements and contributions made by the community or out of public funds.

(7) All company property is controlled by the members of the company, but is open for inspection by the public and community representatives or the Agency for Land and Resources. Members do not have the right of inheritance or disposal. But they have shares in it which can be inherited or disposed of.

(8) A property or portion of land suitable for a specified purpose can be acquired from this Agency by payment of a yearly rent equal to the value or productivity of that property for an agreed term, which may be renewed. The renewal may be regarded as automatic unless there is a change of purpose which must be re-negotiated. One of the problems with tenancy is that people are reluctant to construct or improve a site they may lose. It is probably better that the right to tenancy should be regarded as permanent unless something occurs which makes it necessary to withdraw it. On the other hand a term is required to give a certain security while also allowing re-assessment when conditions change. The right to the ownership of all improvements may overcome this difficulty.

(9) The agency will have to submit its allocations to the Assembly for approval, and individual claims and protests can be submitted to the Assemblies or Courts.

(10) The tenancy is granted on the understanding that the property is maintained and used in a socially and environmentally beneficially manner. This may be specified in greater detail in some cases. Inspection may be carried out from time to time.

(11) The revenue so raised will finance the infra-structure on which industry depends, including the running of government departments.

(12) Failure in the duty and rent will lead to the termination of the tenancy and its transfer to others, or the enforcement of the duty and rent.

(13) The Agency is responsible for the allocation of shares in land according to merit.

(14) Value of the property will be re-assessed periodically since its value rises with population, organization and technology.

(15) All products created by the labour of a tenant existing on the property remain the property of the tenant, and he must be compensated for them when the tenancy is terminated.

(16) A tenant may bequeath an improvement to become part of that property.

(17) A tenancy cannot be terminated in the midst of an incomplete work.

(18) All have a tenancy right. The withdrawal of one kind of tenancy requires exchange for another.

 

The consequences:-

(1) This avoids the pitfalls of both capitalism and communism, of extreme individualism and collectivism. It retains personal initiative as well as responsibility.

(2) The landowner cannot neglect his property and allow it to fall into disuse, thereby causing losses of resources and employment. This is because he has to pay rent the fruits of his own work.

(3) No one would have more land than he could use, and there would be no idle or wasted land.

(4) Land and resources would tend to be used at maximum efficiency and appropriateness. If they are not, the community and the government itself will suffer. It is in its interest to raise maximum revenue. It is in the interest of every citizen that this should happen and he has the right to inspect and lodge a protest where it does not.

(5) The property cannot be used speculatively to make a profit by merely buying and selling without productive work.

(6) As all are equal, all have equal responsibility to the community. This would normally mean that they all have to pay equal tax. But here, this is provided by the common land which everyone shares.

(7) It should not be possible to engage in secret anti-social activities.

(8) This method of raising revenue is not punitive like the tax on wages, products or improvements to property and does not discourage them.

(9) When an owner sells his property he charges a price which reflects the value as enhanced by the surroundings, its site and the facilities in the neighbourhood, the amenities provided by electricity supplies and so on. The fact is that these are not his own work but are provided by the collective actions of the community, and the enhanced value should go them.

(10) No one will be destitute. A certain minimum requirement should be assured, which if the individual fails to do the duty required to earn this right, then he will have to be compelled to do it. Thus freedom has a limit.

(11) The main problem is this: Who controls rents. If it is individual owners then they have the power, but are interested only in the rent not in the products or the efficiency of use. If the government has control or its Bureaucracy then we have a dictatorship which is also mechanical and inefficient. This proposal puts the power into the hands of the community. However, if the community is represented in the Assemblies by professional politicians with personal ambitions as is the case in so called Democracies, this system will not work. It has to be a genuine Islamic political system where the vicegerency is recognised and exercised by all as a right and a duty. The whole system is based on values, and as has been shown on the chapter on Ethics, and any Philosopher or scientist will tell you, no system of values can be sustained without a belief in God, which must be a correct concept, from which such values stem. Humanitarianism will not do. There is nothing, except God, which can arbitrate between one system constructed by human beings and another. Nor is it possible, as Western thinking requires arranging things so that the natural self-interest of people will sustain the system even when power is evenly distributed. This either means that all levels of ability are hampered and reduced to mediocrity, or that some with appropriate cunning will snatch or manipulate the power for their own advantages. 

(12) Classical Economic theory tells us that rents represent the difference in productivity between two pieces of land. Since land varies in its productivity, then if one person arrives on a new land he will take the most productive piece, A. What he produces on it equals his wages, say 10 mu (money units). The next person who comes must take a less productive piece, B. Therefore, if he works just as hard, long and efficiently he will produce less on B than was produced on A, say 9 mu. He might as well work on A and pay the difference as rent to the first person, 10-9=1 mu, and retain 9 as his wages. A third person takes a third piece of land, C which is even less productive. Work being equal, say he produces 8 mu. Clearly, he will be just as well off paying B 9-8=1 mu in rent and retaining 8 as wages, or paying A 10-8=2 mu in rent and retaining 8.

Thus as the population grows rents increase and wages fall proportionally. When there is no more land, the excess population is unemployed and unproductive and begins to compete for jobs. A, B or C may employ them instead of doing the work themselves, but they will pay them the very minimum which those persons are willing to accept. This may even be less than will keep them alive for long.

Since possession of land gives profit and power, having become idle, and having the cash, A, B and C may purchase the other pieces of land and, therefore, reduce its availability to others. The congestion so caused not only leads poorer and poorer land to be used, but also to over exploitation which causes its degradation. Thus increasing poverty, dependence and the control of the few over the many is built into the system. While the total wealth may well increase owing to technology and organization, the proportion of earned wages keeps diminishing while the proportion in unearned rent increases. This encourages people to make their income from rents rather than production and adds nothing to the national wealth. The cheap plentiful labour also discourages mechanisation keeping work menial, monotonous and dehumanising, especially when the employer wants to extract as much out of the worker as he possibly can.

 Some people become more and more unproductive and others have to work harder and harder. Since the poor cannot afford to buy the tools, machinery etc required for work, the money lenders, having plenty of it, enter the arena. The entrepreneur borrows this, employs the redundant workers, hires the land and pays the interest and rent out of the income he makes from selling the products. These products ought to be the wages of the workers. But clearly what they get is this income less the interest and rents. The speculators also enter the scene and withhold land and resources to create scarcity so as to increase prices, and then sell it at a profit. This purely buying and selling is unproductive. Like other form of gambling it introduces an element of uncertainty and chaos which prevents the achievement of a balance between inflationary and deflationary forces. We get an increasing difference between the wealthy and the poor. The poor also suffer from disease, lack of housing, family life, education and opportunity, and are reduced to crime. Classes appear with cultural differences, and the economy assumes a two tier financial system where some products are made only for the rich who can afford them, depriving labour and resources from the production of the necessities required by the poor who cannot, of course, afford them owing to unemployment or low wages. The rich managers and directors live in separate areas, move in separate circles and maintain their separation by paying each other much larger sums than are paid to the workers. This in effect obstructs social movement.

 

One would suppose that this increasing poverty would cause the migration and dispersal of people. And, indeed, it did. But in modern days where lands are enclosed by ownership and by government immigration policies, the opposite is the case. People leave the country for the cities which grow in size and become more and more congested. This brings most of the social problems, including slums, social isolation, disease, crime and moral degeneration. The reason for this is that farming land is owned by the few and technology displaces man power. Labour, therefore has to concentrate into smaller and smaller areas. The real products of labour, particularly farm products have lost value compared to rents and interests, that is, purely monetary products which represent power and control, and these reside in the cities. The need for the efficiency of production also requires the concentration of factories to which labour and raw materials can be brought and from which goods must be distributed. They are set up where cheap labour can be concentrated.

This whole scenario ceases to apply when rent, interest and speculation are taken out of the system.

(Ideas such as these, though not new even in the West, were advanced by George Henry (1839-1897) applying the Ricardian view on rents where “the law of diminishing returns” and the concept of “margins” was applied only to land, though, of course it applies also to products, labour and capital. The argument was used in aid of a campaign for Tax reforms. It was proposed that Taxes should be levied on land in proportion to their value. This theory has an advantage over the Marxist financial one in getting round the problem of why if money accumulated in the hands of capitalists, it did not produce the demand for the accumulating goods, a deficiency seized by economists to create other theories. These ideas could have provided an alternative to Communism, but were, not surprisingly, opposed by Landowners. Economists ignored these proposals and preferred to create other theories.)

The rise and fall of civilisations can also be explained by means of this process. This is because connected with poverty is disease, high mortality rates, ignorance due to lack of education; violence, crime, conflicts due to excessive competition; squalor, lack of housing and family life which prevent moral development; lack of opportunity, freedom and leisure to cultivate higher values owing to the need to concentrate attention on matters of survival. Thus civilisation declines and collapses, and can only start afresh elsewhere. This has certainly been the case in the past. It is possible that the awareness of this process leads to the notion of the Day of Judgement.

However, this is, too simplistic a view. It is always possible to centralise one of a number of inter-related factors and explain every thing in terms of that. There is certainly some truth in this theory, but also in that of Karl Marx. Others have constructed other theories which also work partially. We have to take sociological and psychological, including ideological factors as well as physical, including economic factors into consideration. The problems of population pressure can be relieved by other means.

(a) These economic forces cause the migration of people to other lands,

(b) If no empty territory is to be found, then nations try to expand their territories by conquests, raids and invasions and to enslave or exploit other peoples. The results are wars which reduce populations or congestion which causes disease and also reduce populations.

(c) Organization allows people to achieve more than they can do separately.

(d) Advances in technology and innovation creates machinery, new materials and finds uses for materials which had no use before.

(e) Education and training allows people to do more than they could before.

(f) The increase and mixing of population also allows genetic cross fertilisation which re-invigorates populations. On the other hand restricted inter-marriages contribute to degeneration.

(g) The stimulation, interchange and development of ideas and values changes demands.

(h) It is true that freedom, resources and low population in a new land allow prosperity and the leisure to devote energy and time for the creation of culture and technology. But this can also be obtained by having a class of people who have sufficient leisure, incentive and power to develop and apply it.

(i) The presence of a class of people who are willing to sacrifice worldly pursuits in order to devote time and energy to social, ideological and spiritual pursuits.

(j) Another method of maintaining civilisation is that which is practiced by the West, the import of resources from elsewhere and maintaining an advantage through unfair commercial and political practices.

(k) People have different kinds as well as levels of ability. These require different conditions in which they can be used. It could be that some have not been utilised or that the different abilities have not been co-ordinated or the correct conditions have not arisen or been created for this.

(l) The arrival of a reformer or Prophet who can alter the habits of thought, motivation and behaviour of the people, change their social interactions and relation with the environment. The ideas described above, for instance, radically change the situation from that obtained in Capitalism where property ownership is sacrosanct. And this attitude is quite different from that of those who have no concept of personal property, interest rates, capital, employment, speculation or dominating nature.

(m) Climatic and Geophysical events may increase or decrease the fertility or resources of the land or reduce or increase the population, affect its character and abilities.

The purpose of this digression is to show that economics cannot be considered in isolation. It is because it was so considered in the past that it produces problems because of the impact of factors coming from the fields it has ignored. This mistake ought to be eradicated. It is a part, interacting with others, and belongs to a whole. Though we cannot deduce the whole from the parts, we must assume its existence - and this is known as Surrender.

 

All these different ideas may be put together as follows:-

The first principle is this:- Human beings exist within the Cosmos and interacts with it. The Cosmos is a system and man is a sub-system within it. The individual is a sub-system within a community. Though there are many more levels, we will consider only these three levels. He receives an input, transforms it and produces an output. In doing this he expends some energy which he must replace. Thus he uses some of the output for himself. Some he exchanges with others in the community, creating a complex system which has an overall input and output. And some is returned to the environment. The difference between this input and output constitutes his Growth. Thus the Output is divided into three parts. Growth, Input or Output may be judged along three dimensions:- They could be zero, positive, or negative; they may also be beneficial, harmful or catalytic; and they may conflict, coordinate or be neutral with respect to other products. These parameters are not considered in conventional economic systems. but the fact is things are inter-related. The environment likewise takes the output as an input, transforms it and produces an output, some of which becomes an input for man. These three processes, input, transformation and output are inter-dependant. They are also dependant on the interactions the entity has with other entities in the system, all of which are inter-related.

The second principle is:- Man works to satisfy what he perceives to be his interest. It is not a question of merely satisfying his desires since these are interpretations by his mind. They may be the result of misinterpretation, conditioning, habit or fantasy rather than simple natural urges. Though self-preservation is a simple natural urge, the means a person uses to make a living are provided by the processing of the mind. Indeed, the self-preservative urge may be contradicted by processes which also operate on other urges. Interests exist at several levels - those concerned with self-preservation, socio-sexual urges or self-enhancement. In fact he must work to satisfy his interests and these are the cause and purpose for his work. It follows that if an interest is to be satisfied then someone must work to satisfy it. A person could work for himself, voluntarily to satisfy someone else’s interest or be forced to work to satisfy someone else’s interest. These alternatives are subject to value judgements. Justice demands that people should reap the benefits of their work, for if they do not then work will stop and benefits will not be reaped. Even if they work for the benefit of others, these others should repay their work or it may be that the interest of the person is involved in the interest of someone else, e.g. the spouse, children, friend or community. Interests can be beneficial, harmful or indifferent. They are also subject to value judgements. Intelligence demands that desires should be beneficial, for if they are not then work will also stop. What is beneficial or harmful depends on the nature of human beings and the environment. This requires knowledge, understanding and awareness, and depends on education and the quality of people.

The third principle is:- The work done depends on three factors (a) the nature of the desire (b) the environment, the quantity, quality and ease of the availability of its resources (c) the quality of the work which depends on knowledge, organization and skills.

 

An industrial system is part of the life of the community and has the same structure. This can be represented by the following diagram:-

  

In the case of Companies the case is as follows:-

The current economic system and the proposed system can be represented by the following diagram:-

            

In the capitalist system, the subset, raw materials, are produced by exactly the same Industrial structure, so that they also require raw materials or tools and machinery which wear out. Taxes go to pay for the whole environment in which Industry exists, which is, therefore a subset of the nation. Industry pays for this and benefits from it. The various relationships between these factors and how they change will not be considered here as they have been dealt with elsewhere and other people. We will not argue about these various theories. It is enough to give an example. If, for instance, the proportion of Profit falls to a certain level then the whole of production may stop, and this may happen because wages, interest, rents or taxes rise. Taxes are also used by governments to manipulate these relationships. Their effect in the main is to reduce each of these factors, thereby depressing production. The demand for interest, rents, profits etc take them into consideration and become inflated, or it may not be worthwhile producing if the wages or profits are reduced as a result of them or interest and rents become too high. They are levied not only on these earnings but also on goods and raw materials, thereby increasing prices and reducing demand. The result of which is counter-productive since this also reduces the amount of taxes which can be collected.

All these levels represent income from work to someone which is also used to purchase the products of that work.

The proposal given here is as follows:- Industry exists to produce a product. The term “Industry” refers to human activity and the term “Product” can mean things, services or facilities of any kind, material, social or psychological. The results of Industry will be called Product. All the incomes generated by the surcharges are to be absorbed into Wages and this new entity is the Income. It represents the Product in money terms. It is generated by the work and buys the products of the work. Supply and demand are, therefore, equal. Work requires means of production. This does not only include raw materials, but includes machinery which is constantly wearing out and needs replacement. It also includes the cost of education, re-training, conferences, consultations etc. It also includes rates which are the charge on land extracted by governments to pay for the infra-structure on which the Industry depends - such as roads, communications, water works, planning authorities, police, and environmental care and so on. It could also include energy supply. All these together become Expenses. The income minus the expenses, P-E, constitutes the Incentive. The purpose of Income is to spend it on the things we want. Personal income is spent on personal requirements. The Community collectively also has certain needs and wants. This must be determined by mutual consultation and agreement of the community as a whole. The financing of this is achieved usually by taxes. Here this is paid by collective agreement and is proportional, like the Zakah, to the Incentive of the Industries (i.e. the productivity or utility of the site they occupy) and become Contributions to the Community Fund. These contributions, unlike tax, do not, therefore, fall on production. It buys the products created by Industry itself. The purpose of the contributions is to provide all the enhancements which are included in the notion of Civilisation.

The Product minus the expenses and the contributions, P-(C+E), is the Balance. This balance is distributed among those who have shares, i.e. the workers in the Industry, the Investors and the Community which may have shares in it. This share is called their Interest. In total it is the same as the Balance. It becomes the Income of the workers, investors and community. This is spent the same way on expenses and contributions, the Zakah, Social welfare. The word Profit will be retained for an increase in the Balance. As the workers have shares as well as doing the work, their shares will always be worth twice the shares of the investors and the community. That is, the income is shared equally, 50:50, between investment and work. (This ratio can be altered by negotiation) 

We are then left with three entities Balance, Expenses and Contributions which together form the Product or Income. The Income is spent on the care of the Environment, Social life and Development. This triad corresponds to the triad Rates, Balance and Contributions. It is presumed that everyone has work and belongs to a company, and makes his contribution. If someone has no work, then no contribution is expected. After all, the community is doing nothing for him. It seems that nothing more is required.

 

But people do require land to live on, even if they do no work. And by acquiring it take it out from the community.

In the case of Private residences the case is as follows:-

Some, like farms and small businesses, are also companies. Some large companies provide housing for their workers. The cost of providing and maintaining these is included in their expenses. Others exist on housing estates or in isolation. The price of the land is governed by its relative utility. The greater the demand for it the greater the price, and this depends on what happens in the community in general (the population, technology and the desires or value systems), as well as on cosmic forces (the weather, sunshine, rain, floods, droughts, winds, etc). The practice in most Capitalist countries is to tax them not only on this value but also on the improvements they may make, thereby discouraging such work. It is not merely a question of creating reluctance, such taxes remove part of the income with which it is possible to do this. It is also unjust in counteracting the right to earn according to work. Justice demands that it should be proportional only to the land value. The tax required necessitates work. The tax, therefore, is the charge for the right to exist in the community which provides the facilities which have to be paid for. It is a contribution and should be proportional to the value of the land.

 

An Economic system, however, consists of not only (a) production, but also (b) distribution which includes exchange and (c) consumption. These three are inter-dependant. Problems may arise at any of these levels.

In the case of consumption values play a part and these do not only depend on inherent instincts, but also on tendencies acquired through experiences in a social system which might cause perversions, on how things are thought about, on ideologies, on the state of development of the people. They are affected by changes in fashion, greed, wasteful habits, illusions, and also on political situations and Cosmic factors such as changes in the weather. The desire to establish cooperation and unity rather than competition, laws which allow rent and interest, and the employment of one person by another, all these are questions of ethics. These are not usually regarded as economic problems. But they certainly are, since they affect and are affected by the methods of organising production and distribution. A religion is, therefore, an economic factor. Governments do discourage consumption by taxing cigarettes or alcohol for instance, or encourage other kinds of consumption by tax relief or subsidies. Thus, except for the cost of administration, there need be no over all change in government finances.

The mechanisms of exchange make it possible to make a profit, as land value changes, by merely buying and selling land without any productive work. The same applies to speculation in general, the buying and selling of goods, stocks and shares, even money. This obviously encourages hoarding, something which is forbidden in Islam. This consists of accumulating it and withdrawing it from circulation, thereby causing artificial scarcity and rise in prices. This would not be the case if the difference in value were to be taken away. This is perfectly just in that this difference arises from the development of the community as a whole. It can be done by ensuring that there is a tax which equals the rise and fall in land and other values. Unfortunately capitalist states impose such taxes on transactions, thus increasing prices and discouraging transactions. If it was charged on the profit only and equal to it, then there would be no tax because there was no profit. If it was less than profit speculation would continue. In fact, a profit is required to encourage people to give up their land for better, more profitable use. A way to overcome this dilemma is to turn all land into a communal property and rent it out. But this does not get rid of the other types of speculation, unless they too are brought under communal control. It can be done by ensuring that consumers are also organised like the producers. The producers and the consumers have each a central council, as do the distributors (wholesalers, retailers, merchants). These may negotiate with one another or form a still higher Economic Council which can be part of the Assembly at each level. Consumers could be represented through the retailers who negotiate with wholesalers, representing manufacturers. Similar control is necessary on the Financial Institutions which also deal in shares. The shares of the workers is not transferable. The Investors may, however, buy and sell shares through banks which hold them and a list of their prices. The value of the shares in this system, as we have seen, is linked to the incentives (income - expenses) of Industry. There are no Stock Markets. The share prices will be proportional to the performance, the profits of the industry. This will remove speculations which disrupt Industry and create money without production.

Money may, however, accumulate because some people earn more than they spend while others have needs but not the ability to earn sufficient to satisfy these owing to illnesses and disabilities. The Zakah exists to deal with this situation. It may be regarded as a Social Tax. Its function is only to take a percentage of the surplus, calculated as the wealth above an average, both from earnings and savings, in order to distribute it among those who have less than the average. Wealth must on no account be equalised by removing the whole of the surplus, because this removes incentives.

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NOTES

 

The economic conditions depend on 1. the resources 2. the organizations and 3. the population, its quantity, quality and relationships. These three should be thought of as being related and inter-dependent. It is organization which reconciles and coordinates the other two factors. Resources are not an absolute since it is possible to utilise them more efficiently, to invent new materials, and to utilise others which formerly had no use. The quantity of a population, too, is not critical because it could make fewer or greater demands on resources or have varying degrees of ingenuity and creativity. The problem is mainly one of psychology and politics, of greed and distribution. However, we have to take it into consideration owing to the fact that a certain amount of space is required for psychological health. A certain amount of material resources, health and education are required per person, and world economic and political conditions have created obstructions to the free movement of people, and they transfer resources from the poor nations to the rich. The size of the population is controlled through famines, disease, war, civil disorder, crime and accidents, and through immorality, sexual self-control and contraception. Nature also has methods of controlling the population by creating infertility, homosexuality and aggression. Congestion, pollution, and the altered relationship between the sexes in the more prosperous countries is producing sterility, homosexuality and birth difficulties. This together with the widespread use of contraceptives, abortion, industrial and traffic accidents may well destroy them. Abortion, since it devalues the sanctity of life, encourages indifference to life and, therefore, crime. It is likely that if sexual stimulation by the culture was reduced, and higher values were emphasised instead, then population level would be reduced. On the other hand differences in fertility have fuelled the evolutionary process. An environment can sustain a greater population of people who have greater abilities and fewer needs or want and who exert less pressure on resources than a people who are greedy. They must be regarded as biologically fitter. The practice of birth control is not only the effect but also the cause of greater value being placed on material goods than on human beings. It is, therefore, likely that those with fewer needs will replace a declining greedy population. In some countries increase in the birth rate is encouraged because of the shortage of workers in an economy which could expand or because of the political danger which smaller populations face.

Ideological factors also intervene. Some religions are against contraception because:-

(a) this involves treating human beings like other commodities, according to their usefulness or otherwise to others, whereas human beings should be ends not the means. This attitude has widespread psychological and social consequences.

(b) It creates an obstruction interfering with the intimate relationship and union of man and wife

(c) It leads to abortion which is murder no matter how intellectuals try to rationalise it away. The fertilised egg has all the potentialities of a human being, just as a child has the potentialities of the adult. There can be no distinction between them. Murder as, indeed, all crimes can be defined as deliberate injuries done to someone by someone else for his own personal advantages.

(d) It encourages promiscuity and its harmful social consequences.

(e) It discourages the cultivation of self-control while encouraging sensuality and irresponsibility.

(f) It removes incentives.

(g) The right to have children is a basic biological right. Birth control should not be imposed on people by governments, or pressure groups. There has been a tendency to do this by force, deception or intensive mental conditioning.

(h) It is a plot by the prosperous countries to preserve their wealth and power and to continue seizing the resources of other countries for themselves.

(i) It reduces the relative numbers of the faithful. A religion spreads through conversion, war and conquest, but also through the relative increase in population. In this connection it is necessary to understand that religion is not regarded merely as an idea, but as the reason and justification for existence.

(j) It gives women too much control and freedom at the expense of men whose rights they can flout. Indeed, the Femininist movement has emphasised contraception as means to empower women and making men more dependant on them.

(k) Birth control means that the proportion of the elderly in a community will rise making them a financial burden on the young. This may eventually lead to a policy of euthanasia, the murder of the elderly, the next step after abortion, child murder. This development can only be prevented by a large scale social change in which the elderly are given a function. This requires either the restoration of the extended family where grandparents have a role or an industrial change where the retirement age is abolished, or a change in values so that a human being has a value other than an economic one. The age of seniority is devoted in some cultures to spiritual matters which are regarded as the ultimate goal of life. None of these three factors are likely to arise if Western culture remains as it is at present.

There is no opposition in Islam to contraception provided, as in all other things, there is mutual agreement between husband and wife. Unilateral action cannot be allowed. An Islamic economic, social and cultural system if truly established should not suffer from the limitations mentioned above. From the Islamic point of view life has a purpose. Therefore, the quantity of life has less importance than its quality. If this were not so, killing in wars and by execution of criminals could not be allowed. A human society does not, however, exist for the sake of the economy; the economy exists to serve human society. The purpose of birth-control cannot, therefore, be a means to achieve material wealth, power or pleasure and to shirk responsibilities. It can only be justified on the grounds of providing better facilities and opportunities for development, especially for the new generation. It is better by far to prevent births if the children born, as in the poorer countries, are likely to die from starvation or disease, because the resources are not available and they cannot receive an adequate education even to carve out a tolerable existence for themselves. let alone contribute anything towards the development of the society. The health and abilities of the mother is also better served if births are more spaced out and there are fewer children to cope with. But birth control cannot be imposed on the population in a blanket manner as in China where each family is required to have no more than a fixed number of children. This goes against basic rights and the evolutionary process. If things are so arranged that the most able are also those who are most prosperous then it is they who will be able to support and benefit most children. An improvement of the race which is capable of controlling its affairs is then achieved more naturally.

Contraception should be available only to married couples and strict sexual morality has to be imposed. Policies should be adopted to control the size but also the quality of the population. This means that those with higher qualities should be encouraged to have more children while those with lower intelligence are discouraged from having children. This, in turn, means that affairs are arranged in such a way that the most able will also receive the best education and the highest income. In uncontrolled conditions, this is not necessarily the case where income depends on inherited wealth, accident or psychopathic cunning, and education depends on such wealth rather than ability. The educational system itself is often designed not to develop inherent capabilities but to give advantages to such people. It is also evident that mere skill or intelligence in a particular direction does not create social advantages. A highly intelligent criminal is a disaster. A particular skill is useful only in particular circumstances. When these change, then it becomes redundant, while other skills not formerly valued become more useful. The educational system should develop general adaptability, that is, intellectual, physical as well as moral qualities. It should judge behaviour and performance. It should not be under social control in the sense that public opinion determines values, but rather that objective values should be sought and applied by the community. Incomes should depend on qualifications. This, however, takes us into the realm of politics which must also be appropriate. And this, in its turn, leads us into the realm of ideologies which ultimately depend on religion (in its wider and deeper meaning). Other methods of improving the race have been tried, but these always suffer from the defect that the prejudices and subjective values of a small set of people have to be imposed on everyone else. The result could be unbalanced and disastrous.

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The Zakah could be extended or supplemented to carry out the following functions:-

(a) Instead of creating a system of hospitals, schools and insurance schemes controlled by the State as in some countries, it could provide the money to be used by the persons in need to purchase the services they require. These would be provided by independent companies, thereby retaining competition. This gives greater freedom of choice and removes the dictatorial powers of the State. However, an inspectorate is necessary to prevents abuses in diagnosis and treatment.

(b) It could provide a guaranteed basic minimum standard of living to everyone. A certain amount of food, clothing and housing is essential for everyone. This should be calculated.

(c) Having calculated the cost of the basic standard of life any income above this will be considered the surplus which is taxed for the Zakah purposes. It is clear that the Zakah cannot be simply a percentage of income since the circumstances of people differ. Some have fewer dependants than others for instance, or have special circumstances, such as disablement which require greater expenditure.

(d) The distribution of the Zakah is directed to making people self-sufficient. It has three levels:- (i) the satisfaction of immediate urgent needs. (ii) It is better to provide the tools, machinery and education by which a person is enabled to help himself. (iii) It may also be invested to produce an income which can be used in these ways.

(e) In order to provide this minimum standard of life a certain minimum amount of work will also be necessary. Communal projects should be available where work can be done by the unemployed. The building of roads, communal and sport centers, public gardens and so on could be undertaken by such people. There should be no reason why the fit unemployed should be paid money for being idle. Criminals need not be confined to jails where they are kept at the public expense without being required to make amends for the damage they have done, and their souls are destroyed. They, too can work in the Communal schemes under supervision until they repay their debt.

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In general international competition puts pressure on each nation to devote its citizens almost exclusively to production and technology. Those which do not are at increasing disadvantage. It may, therefore, be supposed that it is impossible for any nation to follow a particular life style unless it is also established world-wide. In Islam, however, the social and psychological welfare and development is more important. These two aims appear to be incompatible. The Muslims will have to undertake a seven point program:-

1. The practical details have to be worked out by establishing experimental communities first. It is not possible to cover everything in theory since much depends on the kind of people involved and how they relate to each other. Theory must not be allowed to become dogma. Neither must practice be allowed to stray from the Ideal. The difference between theory and practice is well known. Each is by itself ineffective and produces more problems than it solves. A third factor is required to co-ordinate them. This involves adaptability, vigilance, tolerance and creativity. Once all the problems associated with the relationship between owner workers and elected management have been satisfactorily worked out, then the number of such companies can be multiplied. The amalgamation of many different Companies into Super-Companies should not be difficult. The whole Nation can then become a Single Company. It will also have the possibility of amalgamating with Companies outside a particular nation, to form International Companies. It is likely that the distinction between nations will disappear, in any case, because of the increasing size and power of International Companies. Since the subsidiaries are semi-independent, competition between them is retained to ensure the necessary stimulus to development.

It is not possible, unfortunately, for whole Muslim nations in their present state of development to undertake this kind of scheme. It is only possible for special communities of like-minded people to do so.

 2. Local self-sufficiency can be practiced by ensuring that the population level and the production of essentials is compatible. Nothing is exported which is needed, and nothing is imported which cannot be paid for by the community. In particular, no money should be borrowed from foreign countries. This has always been a trap, it is counter-productive, and it is incompatible with Islam. They will have to find other methods. The problem, however, is that development requires Capital, and the people are too poor to raise such Capital by taxation. Foreign investment will, however, be allowed as long as the profits made and removed have an equivalent benefit to the community. On the other hand a great amount of money is lost because of bribery and corruption and this has to be very severely clamped down on.

3. A program of extensive and intensive education in new ways of thinking will have to be undertaken.

4. The help of the media of communication will have to be enlisted to change the cultural influences. This should not, however, mean censorship and isolation. It means that there are a sufficient number of right-minded, talented and enthusiastic people with a good sense of values, who can energetically propagate useful ideas and counteract corrupting ones. A system of rewards should encourage good influences. The Law, however, will have to clamp down hard on tendencies which obviously corrupt morality and truth.

5. It is possible to reduce the need for consumer products by sharing, and devoting a greater proportion of time and effort to development in order to ensure that there is always a lead. The planet cannot, however, sustain the continuous pressure for expansion. Economic progress will have to take the form of replacing less efficient by more efficient technology.

6. A sufficient military capability is required to make foreign aggression too costly for them. This does not require a large military force, but appropriate techniques, technologies and distribution of arms. Dependence for these on foreign industries, expertise and research and even finance does not create political, economic or ideological independence. This should have been obvious on theoretical grounds, but it should now be obvious to all nations on practical and historical grounds. Research, probably in ultra-sound, nuclear, chemical, biological and electronic techniques will have to be undertaken, industries set up, and special training given.

7. The propagation of the new system throughout the world ideologically, by example and action. The mistake made by Communism, however, should be guarded against. There should be no political or economic intervention in foreign lands, no attempts at isolation, and the infiltration of foreign ideas, methods and influences should only be fought by better ones.

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The economy depends upon three things:-

(1) Physical resources, including materials, energy and manpower.

(2) Social organization which includes include (a) competition, (b) cooperation with division of labour and (c) united or concerted action.

(3) Psychological factors, which include (a) ingenuity, (b) knowledge and (c) motives. To a large extent human ingenuity can create resources out of what were not useful before e.g. plastics and ceramics where metals are scarce.

 

Motives depend on (a) built-in instincts or inherent urges and needs, (b) Conditioning caused by the actual environmental situation, the need for survival and competition. (c) These are modified by awareness, interpretation and channeling through culture and education, thereby creating values, purposes and goals.

Economic development cannot, therefore, be considered without considering motives and the cultural and social system on which they depend.

Motives are of three kinds:-

(a) Self-centered ones, those which seek personal advantages. Competition creates seven sources of incentive:- (i) money or wealth, (ii) position or status, (iii) power, (iv) sex, (v) attention, prestige, fame, admiration, respect, honour, recognition (vi) Excitement, interest, stimulation (vii) freedom and liberation.

It is true that even animals compete for sex, food and position. But human beings should have a more intelligent way of proceeding. Competition for sex, which free courtship means, has had the effect of destroying families, and this has had an adverse affect on the bringing up of children. Competition for position has meant trampling on others. Competition for money, power and prestige has meant secrecy, deception and intrigue.

(b) Those that are based on love, loyalty or interest for (i) objects, activities or systems (hobbies, firms, institutions etc) (ii) someone, people, spouse and children, for instance, or to bosses, leaders and teachers. (iii) abstract notions such as science, art, the environment etc.

(c) Those based on self-identification with something greater. This includes patriotism, racialism and religion. Islam requires surrender to Allah first and to the community of those who have similarly surrendered second. All other identifications are subordinate to these.

Though the importance of all these needs and motives are recognised, Islam requires a shift of emphasis from the first to second and from the second to the third. The cultural system must, therefore, be designed to do this.  

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To summarise:-

A person lives in an environment on which he is dependant. He has to create a balance between his demand, work and the resources available. When a person lives in isolation he combines within himself the role of manufacturer, consumer and manager. But people live in communities and this creates the problem of inter-relationships and organization. Since conflict is disadvantageous to all, some way of living together must be found. Four phenomena arise (a) competition (b) cooperation requiring compromises and exchange between people (c) centralised action and (d) unified or collective action. The increase of population and desires, the expansion and utilisation of space and resources, the development of knowledge and skills, are three factors which affect and are affected by the relationships.

 Competition usually means that some people gain advantages at the expense of others. In order to prevent conflicts, compromises and agreement must be incorporated into rules. These allow certain kinds of actions, make others a duty and forbid still others. These rules will differ in different places and may have no other function but to prevent conflict and bring order. Competition, however, can be taken advantage of for the social good by ensuring that the advantages an individual obtains are linked to the amount of social benefits he provides.

Cooperation, division of function and organization take place in order to increase benefits, and the three functions, manufacture, consumption and management become divided. This creates a problem of coordination.

Centralised action is usually provided by Institutions, companies or States which impose an organization on people and this is controlled like a machine by individuals or groups who may be responsible only to themselves, to someone else or to the people so organised. The advantages of this are power, because energies are channeled in certain directions, but the disadvantage is loss of versatility, because it is not applied in other directions. It involves narrow selectivity. Mistakes and successes both become exaggerated.

Unified action is produced by common goals, ideas and value systems. No coercion is required and people act creatively and spontaneously from their own initiative and responsibilities in a variety of ways.

The religions of the world were developed in the pre-industrial Agricultural period of the History of mankind. In this period most of the population was engaged in farming, and the economy depended mainly on nature over which man had little control. Given a certain population the demand was fairly steady and the supply depended on the weather, the amount of land available and the labour force. In the Industrial age, however, the proportion of people whose living depended on the land and weather decreased. Most were employed in manufacture and the economy came to depend less on nature and more on what they invented and how they organised things. Problems which exist now in the Industrial system did not exist in the Agricultural one when the religions were formulated.

The problem in a nutshell is as follows:- Competition means that a person sets up a business whose prosperity depends on taking away business from others by any means he can, including selling new, cheaper or better goods than his rivals to the public. The public, therefore, is the judge and constitutes the third factor in the equation.

It is clear that taking away business from others is a hostile act and not a morally good thing. The prosperity of some is obtained at the expense of others. And many of the practices to do this have no advantages or are evils in themselves. Yet the continual improvement of goods, making them cheaper so that people can afford more and new invention are good things to do. The Ableness to do this does not depend on competition though the motive does. There are, however, other motives which can avoid the destructive elements of competition - material, social or psychological incenttives, love, and ideologies.

You can remove competition by combining people into a single unit, for instance, by creating powerful centralised States. This requires the control and restriction of individual initiative, creativity and enterprise. If you remove competition then there is no incentive to make any improvements and you have stagnation. You have to replace incentives with compulsions. What is more, the State incorporates all three factors, the two competitors and the judge or arbiter who determines what is needed or acceptable. This would not be a problem if there were a genuine unity. In fact, however, a State is an imposed organization, controlled by only a section of the population, and as such, it is foreign and oppressive. The removal of one set of evils creates another as has been discovered by people who changed from one system to the other and even back again. There are both advantages and disadvantages in capitalism as well as in Communism. The choice depends on preference and the power struggle.

One way of overcoming this dilemma is to introduce cooperation. This retains variety and, therefore, creativity, initiative and responsibility. A network of organizations is created, each specialized but cooperating with others. Each determines and supplies its own material, labour and educational needs. This has no central control, but the whole of it acts as one since each part affects the other. The efficiency of the system will depend on the number of links which are formed. But the system has no over all direction or purpose. There are a number of organisms which are organised in this way. Some social organisms such as ants and bees are also examples. The most effective ones, however, have a controlling brain.

A fourth condition, one that Islam favours, combines all three in different proportions and allows each of these features to operate where and when necessary, thereby increasing versatility, adaptability and purposiveness. The central organization or brain is embedded in the whole system, receives information from it, sends impulses to control it and co-ordinates different processes. The organization is at the same time the manufacturer, consumer and distributor, so that the unity between these factors is maintained. The organization behaves like an individual. Many such organizations combine to form still higher organizations of the same kind. And so on. This unity is maintained by the other sources of motivation mentioned above.

 

To clarify what is being proposed here:-

Automation and mechanisation will continue leading to the ownership falling into fewer hands while causing increasing unemployment for everyone else. Those who have employment will have to be taxed more to maintain the unemployed in idleness. Manufacture becomes easier and easier causing increasing pressure to sell. This creates useless goods and wastes the resources. To solve this problem it is only necessary to pass a law which bans all employment of one person by another and to substitute it with partnerships in the share-ownership of all industry. It is, however, difficult to pass such a law owing to resistance by the present owners. It requires a change in the value system and the psychology of the people. However, people may come to see that there is a greater advantage in this than paying increased taxes to keep the idle.

Usury may be looked at from three points of view:-

(1) It is an incentive by means of which those who have surpluses or would otherwise waste it are induced to make the money available for useful purposes. But it is perfectly possible to achieve the same result by means of an altered value system such as an Islamic one which requires people to spend for charity or investment while being economic in their consumer demands.

(2) It is a means by which people in advantageous positions take advantage of the disadvantaged or those who have been stupefied by greed for the formers own profit. Apart from being morally wrong, this involves a criminal attitude which is the cause of all injustices and conflicts. It reduces the overall advantages to the society, including those who practice this.

(3) It is a means on which the prosperity of the Capitalist system depends because it allows the few to coerce the many to work for the advantage of the former. In this it is an extension of the slavery, through serfdom to employment. And Socialism is merely a further extension of the same attitude. But this does not produce real wealth because it merely forces people to produce what they do not needs while allowing those who have a surplus to waste it.

The last few hundred years or so of the Industrial Revolution should be regarded as a transitional period in which the environment has changed from an agricultural to a technological one. Man himself has not changed. We may, therefore, think of him as moving, as it were, from one level of a house to a higher one. Though the move itself is rapid, chaotic, traumatic and destabilizing, once he has arrived he must settle down to the new surroundings. The aim of the Islamic community should be (a) to make this move, (b) to refurnish the new level in an appropriate manner, (c) settle down to a life where he can obtain self-fulfilment according to his nature and potentialities.

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Western Economic systems are driven by the greed for financial gain and profit, the desire for promotion, position, rank, power and privilege, the striving for prestige, honour, public recognition or mere publicity and attention, and the lust for sex and pleasure. What religion calls vices have become virtues. But since the harmful effects remain methods of restriction and coercion have to be employed. A hierarchical organization is set up to restrict and compel by those in superior position, and this also leads to the desire for freedom from restriction and the striving to be one’s own boss. These incentives can only exist if the system also provides the opportunities in which they can be fulfilled and if the cultural system stimulates them. These three things must go together. It is these which lead to both constructive and destructive competition, to conflicts, stress and psychological perversions, to expansion and pressure on resources, pollution, wastage and destruction of the ecological system.

In the Economic system proposed here, most of these incentives will be removed or modified. But though this removes the destructive features, it also removes the constructive ones. It will, therefore, also be necessary to replace them with a new system of values and new political system in which it can flourish. But this requires a new education and cultural system. It is not, therefore, possible to create such an economic system without an appropriate and compatible cultural and political system. The three must go together.

It is essential to remember certain economic realities:-

1. That if all the wealth of the wealthy is distributed among the poor, this will not raise their wealth by much. There is no virtue in impoverishing everyone.

2. That the development of the economy and increase in wealth depends on the accumulation of surplus wealth, capital which can be invested for development.

3. That there are only three ways of ensuring Capital ;- (a) That there are a number of rich people who have this wealth and can use it in a wise, responsible and valuable way. (b) That the State takes control, acquires and uses such wealth through taxation or other ways, in a wise and valuable way. (c) That the wealth is more equitably distributed among the people but that they realise the importance of setting aside part of their income for investment. In the first case, the rich in general do not use it in a wise way and there is no coordination between them. The second case leads to totalitarianism and dictatorship. The third case may be a better solution, particularly when combined with better education. A combination of these may then become ideal.

4. That in order to make things cheaply and affordable for a maximum of people, it is necessary to use machinery instead of labour. But the cost of this machinery must be distributed over a large amount of products. This means that there is pressure to produce in mass and to sell these products. Hence the need for pressure salesmanship and propaganda. But since the machine makes labour redundant, the purchasing power is reduced. The competing firms merely take business away from each other and not because one product is better than another. The increased profit of one is the others loss. This contradiction can only happen if there is no coordination in over all manufacture, and there is a distinction between owners who have a profit interest and workers who are used by them.

5. That prosperity can only be increased if new and more efficient products and methods of manufacture are produced which replace older technologies. This means continuous change which requires continuous readaptation. There is a difference of interest between the innovators and workers. Where continuous education is part of industrial life and progress is in the interest of the worker no such contradictions exist.

6. Economic, as all other kinds of development, depends on the self-confidence of the few who are willing to take risks. Most people, however, prefer security. Thus Capitalism works by giving large incentives to those who take risks. It is these people who provide the job for the others. But it is becoming ever more clear that in a changing world there is no security of employment. The difference between these groups, therefore, is an illusion. Since human knowledge and ability is limited and the future cannot be foreseen, there are risks of both failure and success. In general those people are most willing to take risks for whom failure will not be a total disaster. They may have sufficient resources, inner, social or outer, to fall back on. It will be necessary to provide all three kinds of reserves on a much wider scale. This is a task for the Educational and Political system.

7. It is difficult to start new industries in poor countries not only because there is less finance available for investment but also because there is only a mall market for the new products. Only those who are employed in the new industry have the earnings to buy the products, but they must spend this in buying the means of living produced by others. There is, therefore, less money available to buy these new goods. This reduces the demand for them, but also because they cannot continually buy the products of their own labour - each additional item has less value to them. If there is no pool of unemployment or under-employment from which the workers can be obtained, then the new industry merely takes away workers from another industry reducing its output and raising prices and reducing demand. There is no economic advantage in doing this unless the new industry is more efficient - i.e. it produces better goods, creates the same amount of goods for less labour, more required goods for the same labour, or creates employment for the unemployed and under-employed. There is no overall economic advantage in simply creating cheaper goods by cheap labour. Though it does allows the equalisation of income between one area and another, the cheaper goods create wastage by allowing less efficient use. A new industry cannot, therefore, be set up in isolation. Other industries must be set up at the same time. This allows the exchange of goods between the workers is the various industries. It is, therefore, necessary that either the new industry is versatile and produces a variety of goods, or that it comes to some kind of understanding with other already existing industries in which it invests, or that there is an organization which plans to set up a number of industries at the same time in a co-ordinated manner. This could be done by governments, by private individuals or by existing firms.

8. In the present stage of human development most people are unwilling to take responsibilities and frightened of making decisions or able to work without being forced to do so. They seek those on whom they can off load responsibility and whom they can blame when things go wrong. Thus power concentrates in the few. But these few do not have to do the work either since they can force others to do it. Nor can they concern themselves with the welfare of the community, but only with their own, and this has been made to some extent conditional upon serving the interest of only some section of the community - e.g. politicians on the electorate, industrialists on consumers. It seems, therefore, that the present conditions where power is to some extent limited by division, wider distribution and inter-dependence cannot change and are, in fact, ideal.

 

It can be argued that the failure of Islamic institutions arose from the existence of too much personal independence on the one hand and the failure to achieve the distribution and interdependence of power on the other. This caused the collapse into rival sections, the arising of dictators and the present backwardness of the Muslim nations. Muslim nations will have to recognise the reality of the present human condition and deal with it by creating the same distribution of power as exists in the West. However, these conditions also inhibit further development - they reinforce the irresponsibility and the lack of initiative and creativity of the majority. Gradual change will have to be deliberately introduced otherwise this majority will progressively find itself on the scrap heap.

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There are Western objection to the control of Economic activity on the grounds that this leads to totalitarianism and oppression. Yet all Governments, increasingly, have to control economic affairs, to prevent monopolies and ensure competition, to prevent economic malfunctions such as inflation, to increase national prosperity, to balance the national budget, to prevent industrial accidents, to regulate standards in food and goods, and to regulate business and commercial interactions in order to prevent fraud, to protect the common environment and so on. They have no control over international companies which grow daily more powerful, by pass governments making them ineffective, are usually under the control of business interests, and do not consider the social or psychological welfare of the people. There are contradictions and conflicts between companies, leading to uncontrollable chaos. The result of this is, for instance, the following:-

There are a great number of companies dealing in arms. They generally have alliances with other powerful companies which have interest in certain products world-wide. The availability of these products at advantageous terms depends on whether the governments in those countries are friendly to them or to a rival. This can be manipulated by bribery. This may take the form of promising support to some ambitious person, and fomenting civil wars in order to deliver power. The arms dealers, of course, make their profits by supplying both sides in the conflict. The people involved in the conflict suppose that they are fighting for some cause, which may be specially invented for them; the vast majority of the people suffer, are tortured, deprived, mutilated and massacred without knowing why. While these conflicts are going on homes, crops and industries are being destroyed, education, civil and health services are suspended, famines, epidemics and ignorance becomes rampant. The governments of the countries in which these guilty companies reside either have no idea or control over what is going on, or they ignore the situation because of the profits, or they, or some of their members, are in secret collusion with these companies. The general public merely speculates about the causes of this madness. The majority of the conflicts in the world have this cause.

Other instances of economic irresponsibility are the destruction of the woodland throughout the world by logging companies which cause climatic changes, create deserts and cause the irreversible loss of many resources. Over fishing diminishes the ability of fish to reproduce fast enough to replace stocks. Pollution of sea, air and land causes poisoning which may exceed the power of nature to restore balance. Battery farming and the use of hormones and antibiotics to increase meat yields diminishes the nutritional value of foods, causing physiological changes in consumers and reduces the effectiveness of these antibiotics in fighting disease. There are a great number of firms which set up businesses only to fleece the public by means of non-existing or useless goods. Many go bankrupt, causing great losses to investors, but set up businesses under a new name only to repeat the performance. The control of all these and other abuses merely by Law and inspectors has proved to be ineffective.

The need for greater central and general responsibility, information and control is, therefore, quite evident. But, in order to prevent the feared totalitarianism, there must be much greater industrial and general Democracy. This, in Islam, means not only greater power to the people but also greater responsibility and accountability. This cannot, however, be done without appropriate education and re-organization.

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Apart from the Communist and Capitalist views there is another way of looking at an economy.

Consider a community of 1000 people. Each person needs (1) an average of 100 units of congenial space (su), (2) 100 units of resources (ru), (3) has an average of 100 units of wants (wu), (4) works 100 labour units (lu) to (5) create 100 units of products (pu) to satisfy these needs, and (6) is paid 100 money units (mu) for this labour with which he purchases these products. He will also need (7) 100 units of control (C.U) in order to co-ordinate all these.

The whole community gets 100x1000 = 100,000 mu for the 100,000 pu, and this is sufficient for them to purchase all the products and satisfy all their 10,000 wu. Now suppose that 10 men control the economy obtaining 10,000 mu for themselves. Most of this is taken out of circulation and accumulates in the Bank since their wants are still an average of 100 wu. It creates unemployment for 100 people who produce nothing and cannot satisfy their needs.

This problem can be solved in three ways:-

(1) These 100 people could start another enterprise. But this is not possible if the 10 people have all the control, i.e. 100,000 cu.. It is not possible if they do not have the abilities, education, means, organization, political or legal rights. It is entirely possible that if the 1000 people have an average of 100 cu, this control is concentrated in 10 people while 990 people have 0 cu. The distribution of control can, therefore, be seen as important in the way the economy works.

(2) The government can remove the excess by taxation and return it to circulation by employing the surplus workers in some community projects. It may simply pay the employed without creating anything. This simply means that the price per unit of product goes up and the amount of dissatisfaction is merely distributed from the 100 to the 1000. The same 100,000 mu must pay for 100,000 - (100x100) = 90,000 pu. Everyone is 10% wworse off. Some of this money will then also be used in collecting the taxes. What the government does depends on the nature of the people who form the government. They may not be interested in the people as a whole, but only with their own interests or that of their group or class or some ideology. The government can be democratic or autocratic to various degrees. That is, it can take from 0 to 10,000 cu. In so far as they are a single unit and there is no diversity or competition there may be no incentive for development or efficiency. They may also miscalculate needs and produce unwanted products or fail to produce wanted ones. Here the word “product” should be understood as goods, services and facilities.

(3) The Businessmen or the Banks can invest the surplus to create new enterprises which re-employs the 100 unemployed. However, they do this only to make further profits which increases the problem later. Such projects depend on the existence of new projects - inventions more efficient ways of production etc. Hence the need for constant research and innovation. It is also possible to force total wants to go up by advertisement, salesmanship and by ensuring that fashions change and that the durability of goods is reduced. Profits are also increased without increasing the total production or services merely by constantly buying and selling or by gambling. This absorbs large amounts of money uselessly. One way in which things are equalised is that there is equivalent business failures and bankruptcies. These will take place at the same time as the accumulation of profits, or the two will alternate with each other.

 

It follows that the first of these alternatives is better if there is a more even distribution of control.

The other factors, space, resources, labour etc may be dealt with in similar way.

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Muslims exist in most countries of the world, where they are usually a minority of the population and generally in an inferior economic and social position. Though there are many nations in the world where people claiming to be Muslims are in the majority, some of them are ruled over or dominated by foreign powers or a non-Muslim minority, even when ruled by their own people. There are, in fact, no Islamic economic, political or educational systems and most of the people are Muslims in name only. This presented no great problem while the people were apathetic, knew little about Islam and did not distinguish themselves from others.

There is, however, now a definite revival of Islam. People are becoming much more knowledgeable about it, many new converts are swelling its ranks, and they are becoming conscious of themselves as a distinct people. Their actions, thoughts and motivations have been transformed and they have dreams and ambitions which require fulfilment. This either brings them into conflict with other people and powers or these others will have to accommodate them. Conflict, however is not necessary since Islam teaches self-reliance and personal responsibility. It is the Muslim people themselves who have to take their affairs into their own hands.  

True Islamic communities will have to be set up wherever Muslims exist, with their own separate alternative educational, political and economic institutions. They will have to set up their own banks, factories, farms, shops, and distribution networks. They may at first being employed in non-Muslim firms, save and place their money in Muslim banks, set up and utilise Islamic educational institutions and commercial facilities. Then with the money saved set up their own factories and farms and become independent. In these days of transport and communication technology, especially computer networks, the community need not even be confined to any particular geographical area. All the communities world-wide can be linked together and by pass all national boundaries.

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