K. Rahman Khan, Deputy Chairman of Rajya Sabha on January 17 said that Islamic economics could be an alternative system to come out from ongoing global financial crisis and to achieve a just and stable economic order.
“We cannot just say Islamic economics is best in the world. It is one of the alternative systems which can be evolved to achieve a just and stable economic order,” Khan said while presiding over a lecture of Prof. Nejatullah Siddiqi, renowned Islamic economist, on global economic crisis and relevance of Islamic economics at Constitution Club, New Delhi.
Mr. Khan, emphasising the need to present Islamic financial system in front of the world as an alternative, said, “We have to play a pro-active role in it, as it is being successfully adopted in some countries as a role model,” he said.
“The entire world is hungry for an alternative economic order and Islamic banking and Islamic economics can be a viable alternative but Muslims should be proactive in presenting it,” Mr. Rahman added.
“At present no one has a readymade solution of this global economic crisis, all of us should find out a way to come out from the recession while Islamic economics prescribes various sets of rules which is based on the principles of justice and morality,” said Nejatullah Siddiqi, former research professor at Islamic Centre in King Abdul Aziz University, Jeddah.
“Islamic economics stands for abolition of riba (interest) and maysir (gambling-like speculation) in financial dealings as well as a regard for the interest of others in one’s pursuit of material gain,” he added.
“Abolish interest and gambling from financial dealings and bring morality back to market,” he urged.
Pointing out the present economical system and its basic elements i.e. gambling-like speculation, debt-financing and uncaring attitude with others, Prof. Siddiqi said, “These factors are the basic cause of present financial crisis and debt-finance coupled with speculative products whose intricacies defy understanding provide ample opportunities to greedy profit-maximising agents to exploit the aspirations of ordinary investors and for goading home owners and consumers into living beyond their means and chasing untenable dreams.
“The global financial crisis is the outcome of complex phenomena. We can understand it by studying the causes that led to the current situation. The causes are many including immorality in economic activities, uncontrolled debt finance leading to debt-trading and gambling-like speculation.
“Economics being taught today considers ethics out of its bond. The approach is that the “business of business is business” and so one should not bother about ethics and morality. It is true that man is basically self motivated and acts in self interest. Islam does not teach that one should not work in self interest as this would be against the human nature. Self interest is ingrained in human nature so it is perfectly all right to vie for that.
“However, Islam teaches in ascending order of recommendation to (1) work in self interest without causing harm to others; (2) act in such a manner that both self and other persons are benefited; and (3) share more and more the fruits of one’s labour and other possessions to others along with fulfilling one’s own needs. The last most recommended approach may be called the “caring and sharing” attitude.
“Apart from encouraging this high moral, Islam aims at equity and justice leading to fair distribution of wealth and ensuring survival of every human being with dignity.
“Debt finance will not eliminate from the society. An element of debt is part of trade finance as both debtors and creditors are part of a prudent business activity. But the uncontrolled reliance on debt finance coupled with trading in debts is unhealthy. Islam forbids interest and in this process the volume of debt in trade will automatically be curtailed. Prohibition of interest on loan eliminates trading in debt.
“Capitalism has contributed to the concept of investment in the present against the income expected in the future. Earlier the concept was to accumulate incomes and invest the same on a future stage. The system of present investment in anticipation of the future incomes is fraught with risks. But risks are inbuilt in business and other ventures. There is the need of regulating this form of investment. The American system ignored the need of regulation and allowed several uncaring financial intermediaries to play havoc.
“Another cause of the crisis is the gambling-like speculation. Risk-taking is ingrained in a business venture. But the speculation akin to gambling makes economics casino like. Islam forbids gambling leaving no scope of foul play in the name of speculation.”
H. Abdur Raqeeb, General Secretary Indian Centre for Islamic Finance (ICIF) while proposing vote of thanks, said this programme is the beginning of discussion on this topic and invited all to join in presenting a role model for projecting Islamic economics as an alternative economic order.
Dr. S.Q.R. Ilyas, convenor of Samajik Chetna Manch coordinated the programme and briefed the audience about the topic wile Patron of the Manch Dr. Mohammed Rafat welcomed the guests, speakers and the audience. Dr. Waqar Anwar presented an introduction of Dr. Nejatullah Siddiqi and his contribution to Islamic economics and his outstanding works.
No religion prohibits a person for doing self-interest business and religions preach to care your interest as well as others too while nearly all religions prohibit a person not to gain self interest on the cost of others while ‘caring and sharing’ is the basic principle of Islamic economics. The first thing that Islamic Economics prohibits interest and interest based financing, second, gambling-like speculation and third uncaring or selfish attitude with others and these things keep down the risk of crisis as Capitalism or its element debt-financing amplifies the crisis factor. Caring and sharing nurture social welfare environment and the purpose of religion is not development but to establish and promote equity, fairness and fair division of wealth that exactly Islam wants.”
“Usually future is made by the income of past or present but it is introduced in the present financial system to make present by the income of future by facilitating lone as it is started in the era of former US president Bill Clinton to provide lone in small units for homes with mounting interest-rate to anyone without caring that the person is capable to repay or not. In this financing, neither banks nor the broker, who takes commissions from both, the person and the bank, care about the person’s repay capability. This thing becomes the cause of present recession and it is called as sub prime crisis,” he added.
Saying totally wrong to say market is amoral, he opined, “it was emerged since some decades that economic is amoral and market is morally neutral that is totally wrong and we have to change this attitude of market functioning and we should make moral to market while someone or some groups may or may not be agreeing for adopting interest-free financial system but at least they should agree in making market honest and moral and gambling produce no net profit for the society and it is zero productivity and zero gain activity for a society and the world as a whole. There is no space for moderateness in the capitalism and it urges more and more financing and profit at anyone’s cost while nature is moderate.”
Concluding his lecture, Prof. Siddiqui said it is a topic of serious concern as economists warn that it is the beginning of recession and it can go worse, and called on addressees not to take it just an academic discussion.