Write an essay on Compatibility between Islam and Capitalism ?
"Are Islam and Capitalism compatible?"
This Essay would discuss about the compatibility between Islam and capitalism. The start of the Essay the details about capitalism is provided and what is considered as capitalism are discussed. The next thing in the essay would give a brief on Islam. The next part of the essay would look at different views of Islam including the sharia law. Continuing the same discussing other aspects of crony capitalism, which has found its place in Islamic countries is discussed. The issues around crony capitalism and how it causes a hindrance in starting a new business is discussed. Then in this essay, there are examples of Islamic countries like the turkey are provided. In these countries a compatibility between Islam and capitalism has seen an enormous growth of the country without sacrificing principles of Islam. On the contrary, there are examples of countries like Egypt, wherein there has been attempts being made to establish this compatibility between Islam and capitalism but has not given positive results. The other aspects which are discussed in this essay are what are the issues which are causing hindrance between establishing the compatibility of Islam and capitalism. The last part of this essay would provide a brief conclusion on this topic of compatibility between Islam and capitalism along with how would it be beneficial if this compatibility is established.
Compatibility between Islam and capitalism.
Capitalism is basically on the fact that the owner is a private party which controls the finances. The finances are controlled based on the fact that the more the production and more would be the profit. The base of capitalism is competition, It can be competition between the parties or the product. Goods or product should be manufactured keeping in mind the demand for the product. Once the demand has been identified equivalent supply should be provided in the market. Capitalism also makes use of the fact that the government also plays some part in growing the profits, but this demands on the capitalism model which has been used in that part of the world. Capitalism has found its place in developed countries to a great extend, this has resulted in high financial benefits to the developed countries. The Basic principle of market trends is used to generate profits rather than the government deciding the production. Private parties can give freedom to do whatever they want to gain profit. There are some major negative associated with capitalism as it does tend to increase the inequality in society. In addition the other negative thing about capitalism is the it forces consumption and that comes as the first thing.
The Arabian Peninsula was the place where the religion of Islam was founded it started in the 5th Century. The prophet Mohammed started this community in Medina. Later this religion was spread across multiple countries and it gained its popularity. Arab countries have a majority population of people who follow Islam. Now it has also found its place in middle east and Europe.
It is quite difficult to do business in Islamic countries as they don't follow capitalism. There are some major reason to justify how it is difficult to put capitalism in Islamic states. In Islamic countries personal status is a very important factor and everything revolves around this status. This is a major hindrance in capitalism, which expects a free society and the market should be accessible to everyone irrespective of the status of the personal status. This is an issue even in terms of income for Arab countries. Some of the Arab countries are also dysfunctional economy even today. West has seen a drastic growth has not been faced in Arab or Islamic countries. This was not the case few centuries back as Islamic countries were much richer and their growth was higher than Europe.Even as early as 20th century the Genoans who was more in favor of capitalism won the battle of trade against Maghrebis who were more of an Arabic background. The main reason for this Genoans victory was as they explored more options for trade rather than traditional ways. They started to create a business environment which was more conducive. This Environment allowed them to invest in profitable work and establish themselves, whereas Maghrebis were never ready for this change around capitalism. The Maghrebis ways were confined just to look for opportunities within their family, which did not help them to grow much in commercial values. The same conditions are still very much present in current day Islamic countries.
Arabic countries have lots of religious beliefs, As Islam is found by the trader. There are lots of things in Islam, which favor the business and establishing wealth. Even in the holy book of Islam it is considered that wealth should be created, but it should not be for private benefits. There is a big belief that Sharia plays a role in taking a negative approach to capitalism. There are major liabilities in regards to sharia. Sharia did not help in creating a long partnership as it was within the families and ended once the person of the family was dead. Some of the things which is restricted by sharia is joint companies which stocks spread across this can have a devastating effect on capitalism. Sharia also divided the capital into small parts after the dead of head of family, which does not help with higher investment as the capital in divided across multiple people. The other factor which effects capitalism is it does not allow interest. The Waaf which was created according to sharia for charity purpose were starting to use as an option to save taxes. There were big establishments created in the name of the Waaf and which did not help economic growth in Islamic countries. In some cases the Non-Muslim were allowed to operate under non sharia laws which started to show its impact and these people were able to expand their business and became richer. Slowly Islam has also started to see a trend where sharia law gave some exemption to Muslim people and it has been helpful in the growth of the communities.
Apart from the sharia law there other major factor which is not allowing capitalism to grow is political. The government in these Islamic countries is quite rude and does not create a constructive environment. The Government is not questionable and has been dominated by people who are on higher personal status. Islamic government started to take control over private property and have created an atmosphere where private parties do not have a say in resources such as oil. So the wealth of an entire country is in the hands of the ruling government who could use this wealth in whichever way they want to use it. Even though there was a modernization in Arabic countries it was confined to giving the power of finances to ruling bureaucracies. In the next few centuries the Arab government has started with lines of capitalism, but it was more confined to a companion based capitalism that is what is leading capitalism in Islamic countries now as well. The problem with this type of capitalism is that it does not provide a free market for open competition and is just confined to people who are friendly with the ruling government. There are lots of issues with this type of capitalism, which exists in Arab countries. As to start a new business person needs a license, which is provided by the ruling government and until and unless there are good friends, it becomes impossible to get this license which is a hindrance to capitalism. The next problem area is that once you start the business with this type of capitalism the expectation from the bureaucrats is that they would get some share of profit. If you don't have this friendly relationship with bureaucrats than it becomes challenging to start even a small time business within 2-3 years, This is leading to unemployment and static growth in Islamic states. The way these entrepreneurs setups are establish in Islamic countries also indicates that it is more trying to show power rather than for profits. The capitalism, which is developed in Arabic countries is quite dangerous as it does not allow competition to grow. There is a government influence which results in crushing the prosperity chances in these places.
One of the noted changes is in the turkey where things have changed drastically as it has opened up to capitalism the budget is fine, trade is encouraged and efforts have been made to cut down the friendly capitalism. Even though these people follow Islam vigorously but still they have shown that this is not a reason for not adopting to capitalism in a big way. The Turkey has started to export 25% when it was just 3% exported in 1980.The high amount of export in recent years shows that the turkey has been benefited from capitalism. This is a clear indication that Islam is compatible with capitalism. The big question is can this model of the turkey be used by other countries to follow the path of capitalism. There are instances which indicate this trend to grow as was the case during the revolution of Arab spring. Islamic young people showed the world that they were also looking for ways to move forward rather than staying at where they are currently. They demanded capitalism and democracy.
On the contrary, there is the case of Egypt where there have been lots of attempts being made to change the environment to be more open for business. To learn from the ways western world has evolved, but these revolutions failed to last long and Egypt still continues to show its incompatibility with capitalism. But the revolution still continues and it might happen someday that even in the Egypt importance of capitalism is understood by the government and a free market is provided for people to start their own business.
The other beliefs in Islamic states in that capitalism bring depression as there are lots of up and downs. The reason for this in their view is the market should be made sustainable for growth, which might not always be possible so a big businessman can be working on low wages the very next day. The other prospective they give is that man would become helpless under the influence of the economy and everything would be controlled by the economy be it the happiness of a person. In the view of Islam the employer would start to ill treat their workers to gain more profit. The other negative effect of capitalism on views of Islam is that it would start a dominance of major companies, which would try to dominate the minor companies. As these are private companies it would not be possible for government to stop these activities and minor companies can suffer at the hand of big companies. Islam has been against the slavery and it is believed that capitalism would result in a high amount of slavery, this is also one of the reasons why Islam and capitalism are not considered as compatible. As per Islam the employer would make sure that they gain profit from each and every person who works in the business, hence it might result in over work on workers and under payment on the work done by them. The other view on capitalism is that it increases the amount of loan a person has to take in order to start their establishment. This loan amount would result in pressure on the individual to reach success at any cost which might have a very bad impact on the person and the family.
There has been instances where Islam and capitalism has seen a compatibility, but it is very difficult to establish this compatibility. Islam is not a capitalism and it is not even a socialist as Islam is based on principles which should be followed, but capitalism would require sacrifice some of these principles which might make it even more difficult to be compatible. The Islamic motive of business is different and the profit margin should be limited to an extend and it should not cross that limit, whereas capitalism gives a free hand to the businessman and there is no limit on profit margins for the person. This restriction on profit margins of Islam would be difficult to be compatible when compared to the way capitalism is based. There are other restrictions on Islamic ways of economical growth wherein quite a few emphasis is given to the almighty whereas capitalism does not consider this factor. The principles of capitalism are based on demand and supply, which in turn would create an atmosphere wherein this demand is created by any ways, even if these ways are not correct. Islam does not believe that economic growth can solve most of the problems faced in a country. In views of Islam economical growth can in fact cause many problems. These views are contrasted as compare to capitalism.
Capitalism and Islam might have contradicted principles, but still there is a place of co-existence. Capitalism is based on the fact that economic growth is very important for a country. Demand has to be created so that supply can be provided which in turn would result in profit margins. Whereas Islam has certain laws like sharia, which does not give freedom to do business other than within a family which does not help in establishing business on a bigger scale. There are other constraints as well, which are related to Islam, such as corny capitalism. This type of capitalism results in partial decision towards certain people, which have a good relationship with authorities in government. This in turn is not helpful towards the growth of capitalism, which required an equal opportunity for everyone who wants to establish business in the country. There is a need to establish a compatibility between Islam and capitalism as it has been the case of turkey. The Turkey has started to see very good amount of growth capitalism was established without sacrificing the basic principles of Islam. There is another case of Egypt, wherein lots of efforts were made to establish this compatibility between capitalism and Islam, but till now this has not been possible. Even though it is difficult to establish a compatibility between Islam and capitalism its benefits are huge. Arab countries need to find an intermediate path to establish this compatibility. This would result in a great deal of economic growth across the world and even the basic principles of Islam should be kept intact.
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