Currency and Justice

HIFZUR RAB, in this short write-up, opines that adoption of a proper measure of wealth as a currency is a prerequisite of economic justice

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HIFZUR RAB

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HIFZUR RAB, in this short write-up, opines that adoption of a proper measure of wealth as a currency is a prerequisite of economic justice

The first and foremost requirement of economic justice is correctness of measurement that can be said to be the first brick of the foundation of the institution of economic justice. The measurement that is central to economic justice is measurement of wealth. Measurement is the process of comparing with a unit, and unit is a precisely defined quantity of what it measures. Clearly, unless we have a unit, we can’t make a measurement. If there is any manipulation of unit, all the measurements will be corrupted. Therefore all the measurements will be unreliable. Accounting will produce wrong results and your muamlat (economic transactions) based on such measurement will be unjust, deceptive and fraudulent. In such scenario all our data will be corrupt and unreliable. Accordingly, all empirical studies, simulation studies as well as inferences derived from such data by any other process will lead to misleading and deceptive results. If anyone has any doubt, let him/her ask a scientist or a technologist as economists do not study units and measurements and their knowledge and understanding of these issues is superfluous!
Prevailing fiat money is a basket of national product and the quantity of its constituents is changing (continuously falling). Since it consists of variable quantity of goods and services it is clear that it does not qualify to be considered a unit. For example, you can call mass of 1000 carbon atoms to be a unit of mass because it has constant mass. But if the number of carbon atoms is varied, its mass will vary and then it will not be a unit of mass. Market determines prices by comparing market value of various goods and services with currency. This measurement of prices by the market has become corrupted as currency is not a unit of wealth. As a consequence, the prices of the goods and services produced by the unorganised sector, the poor, the underdeveloped and developing countries are under priced and this is one of the most important cause of growing disparity/poverty and deprivation.
Similarly an essential condition of justice is that currency must be a reliable unit of wealth as it is used as a unit of account for determination of dues, profit and loss. Thus it is clear that having abolished gold standard without creating any alternative unit we are left with a world that has no unit of wealth. Thus in the decision to abolish gold standard without creating any alternative unit of wealth, the powers that be have decided to abandon justice. Thus in this respect the so-called enlightened world is actually an ignorant world and we have reverted to the dark ages of human history. As a matter of fact interest-based capitalism is the root cause of all these problems. The money is manipulated because the system of interest cannot be sustained otherwise selfish and greedy capitalists are likely to continue to ensure that it sustains.
Justice is not possible in absence of a reliable unit of wealth. Currency is the most widely used measure of wealth; therefore it must be a unit. If the governments do not do so, all those who stand for justice must first adopt a unit of wealth that rightly measures manipulation in the quantity of national product that fiat money is. Although better standards are possible even the basket of goods and services that represent currency on a suitable date may be considered to be a unit of wealth. CPI and WPI give a rough estimate of this variation in the quantity of goods and services that currency is and therefore it may be used till better alternatives become commonly understood and applicable. All our receipts and payments must be corrected for the manipulation in the quantity of national product that currency is. This correction is essential for determination of profit and loss and dues in all cases that are free from interest and including Quardh Hasan. Please note that justice requires a reliable unit of wealth and justice is not possible otherwise. If we apply this correction, we will be able to conduct most of our muamlat in a truly Islamic manner and there will be no need to indulge in Hiyal.
May Allah Subhanahu Wa Taala guide us to see the reality as it is and to form an opinion regarding it according to its reality. Aameen.