The Opposition between Capitalism and Islam

The surprising title is due to the fact that Capitalism is the religion of worship of wealth, so Islam (not Islamic Economics) is the right contrast. Max Weber characterized capitalism as the pursuit of wealth for its own sake, without regards to any benefits obtained from this wealth. For more details see: The Religion of Economics.

To understand why capitalism is a religion, we need to study the Historical Origins of Capitalism. A brief sketch, in outline form, is given below:

1. Scholastics attempted to build social theory on basis of the Bible and Christianity
2. Centuries of Religious Wars in Europe led to the realization that society cannot be built on Christian principles.
3. As a result, Christianity confined to a personal belief in Europe.  Study of social, political, and economic institutions was to be done on secular basis.
4. Hobbes was the first to build a political theory on purely secular grounds.
5. Study of Economics on secular grounds soon followed. This eventually replaced the idea of Economics as a branch of moral philosophy

The fact that modern economics is based on the rejection of Christianity is obvious from the way the subject is treated in textbooks. We start with the premise that there is no God, Judgement Day, Heaven or Hell. This means that Man is just another type of animal, and Human society is governed by laws of the jungle: Greed, Competition, Individualism. Since there is no life after death, we should strive to create heaven on earth. For this purpose, individually and collectively, we should strive to maximize weath. Pursuit of pleasure, power, profits is the goal of our lives. These are the founding principles of Capitalism, and are more or less explicitly exposited in modern economics textbooks. There is a stark contrast between these, and the fundamental principles of an Islamic Society:

1. Generosity vs Greed
2. Cooperation vs Competition
3. Social Responsibility vs Individualism
4. Success on Judgement Day vs. Pleasure, Power, Profits of this world

We briefly discuss each of these contrasts separately.

Generosity vs Greed: The greed of the financial sector has been recognized by many as the root cause of the Global Financial Crisis of 2007. The institution of banking did not emerge until the Biblical “Love of Money is the root of all evil” had been replaced by the Shavian “Lack of Money is the root of all evil”. In contrast with banks, representing greed, the Waqf, representing generosity, is the central financial institution of an Islamic society. One third of the registered land in Ottoman Empire was devoted to Waqf. People acted in the accordance with the Islamic ethic of spending excess wealth on others, to buy rewards of the Akhira

Cooperation vs Competition: The assumption that life is a jungle governed by survival of the fittest leads to the theory of perfect competition. If all agents are selfish, then monopolies are harmful. A monopoly of doctors would be able to extract massive amounts of revenue from the population, as the American Medical Association does in the USA. In contrast, if traders join to provide service, they can bring great benefits to the population. The Guilds of Al-Andalus and Ottomans had the goal of providing service to the population. This is the critical difference between Islamic and Capitalist Firm: Islamic firms are motivated by Service whereas capitalist firms are motivated by Profits

Social Responsibility vs. Individualism: The individualist philosophy of Everyone for himself has led to breakdown of the family in the West. Over 50% of children are born to single mothers. Islam teaches us that the Ummah is like one body, and every part feels the pain of the others. Islam places great emphasis on our duties and responsibilities to our family, elders, children, neighbors. Social responsibility is manifested by spending on others, for the sake of the love of Allah, and is heavily emphasized in the Quran.

Success: Akhira vs Dunya? Corporations causing enormous damage to humanity and the planet due to short term greed for worldly profits and power. Islam teaches us to sacrifice worldly pleasures for the sake of the success of the Akhira: You will not reach the GOOD (BIRR) until you spend of that which you love!  Striving for success on the day of Judgment leads to radically different behavioral patterns from the capitalist striving for pleasure, power, and profits.

We have argued that the Foundations of An Islamic Society are radically different from Capitalism: Generosity, Cooperation, Social Responsibility, Success in Akhira stand in dramatic contrast to Greed, Competition, Individualism, Worldly Success. But this immediately leads to the embarrassing question:

SO – WHERE IS this Islamic Society? WHY, if it is so superior, do we not have a working model, to show the world?

The answer was given by Ibn-e-Khaldun’s landmark history written seven centuries ago. All Civilizations Evolve Over Time from Youth to Maturity to Old Age. Teachings of Islam catapulted ignorant and backward Bedouin into world leadership. These teachings created a civilization which enlightened the world with knowledge for more than a thousand years.

For the past three centuries, the West has taken the lead in the production of knowledge.

Today, the challenge facing the Muslims is to show how we can implement the complete and perfect guidance of the Quran to solve our problems today. This is a deep and difficult discussion, and some aspects are available from The Ghazali Project for
Revival of Islamic Societies. Some talks addressing this issue are available from the links below:

1. Central Ideas of the Ghazali Project: http://bit.ly/Ghazali1
2. The Ghazalian Webinars: http://bit.ly/AZwebinars
3. How to Launch an Islamic Revival: http://bit.ly/azlir
4. What the World Lost due to the Decline of Islamic Civilization:  http://bit.ly/azrdm