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M. Bakri Musa

Seeing Malaysia My Way

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Location: Morgan Hill, California, United States

Malaysian-born Bakri Musa writes frequently on issues affecting his native land. His essays have appeared in the Far Eastern Economic Review, Asiaweek, International Herald Tribune, Education Quarterly, SIngapore's Straits Times, and The New Straits Times. His commentary has aired on National Public Radio's Marketplace. His regular column Seeing It My Way appears in Malaysiakini. Bakri is also a regular contributor to th eSun (Malaysia). He has previously written "The Malay Dilemma Revisited: Race Dynamics in Modern Malaysia" as well as "Malaysia in the Era of Globalization," "An Education System Worthy of Malaysia," "Seeing Malaysia My Way," and "With Love, From Malaysia." Bakri's day job (and frequently night time too!) is as a surgeon in private practice in Silicon Valley, California. He and his wife Karen live on a ranch in Morgan Hill. This website is updated twice a week on Sundays and Wednesdays at 5 PM California time.

Wednesday, October 21, 2009

Towards A Competitive Malaysia #126

Chapter 19: Islam: The Solution, Not The Problem


Islam and Capitalism


Just as the ancient Chinese had all the ingredients that could have propelled them into their own industrial revolution, so too the ancient Muslims had all the necessary environmental milieu and intellectual underpinnings that could have led them into formulating their own brand of capitalism and free market. Their collective failure to make the leap forward reflects the non-linearity of the progress of society, as discussed earlier. Having all the ingredients does not guarantee that a society would catapult into the next stage of development; that society could just as easily regress.

Of all the major faiths, Islam is one that should have ushered in free enterprise and capitalism. The faith is not burdened with the theological doctrine of glorifying poverty, as encapsulated in the Christian scripture that the poor shall inherit the earth. Islam is also not burdened with guilt over profits. On the contrary, Islam recognizes profits as legitimate rewards from lawful activities. Unlike in Christianity where the concepts of profits and profiteering are not too far separated, Islam does not have such a theological burden. Making a profit is specifically encouraged and regarded as an act of worship (ibadat); believers are exhorted to do so and thus earn a living.

The ancient Muslims already had a thriving economic system of sorts, and with all the rudiments of a free market system. They had an elaborate mechanism whereby a merchant could collect and deposit their payments without having to carry their money with them on their long caravan journey and thereby risking robbery. In effect, the beginnings of a checking and banking system. Similarly, they had a mechanism for sharing and pooling risks—takaful.

Consider Mecca, Islam’s holiest city. It was also a major trading center; it would be hard not to associate Mecca with trade. There was no separation between trading and meditating, between accumulating profits from pursuing piety. Even today’s pilgrims carry on this tradition, trading while performing their religious rituals. Far from being frowned upon, this co-mingling was encouraged by the practices and utterances of the prophet (sunnah).

Prophet Muhammad (bpuh) was a successful trader long before Allah picked him to be His Last Messenger. That Allah had picked a trader must surely reflect His high regards for the profession of trading.

There are numerous verses in the Quran and in the hadith exhorting Muslims to trade and to exchange goods and services voluntarily, between believers as well as non-believers. One of the prophet’s companions and second Caliph was reported to have said that he would rather die on the saddle of his camel conducting commerce than in the pursuit of jihad. A hadith has it that on the Day of Judgment, the honest merchant would be in the same company as martyrs of the faith.

Likewise there are numerous Quranic verses addressing the issues of property and contract rights. Yet today, there are many Muslims who would like us to believe that profit making and trading, the essence of capitalism, as un-Islamic and manifestations of greed and exploitation.

At the first formal Muslim community at Medinah, the prophet specifically encouraged trading by not imposing any tax or conditions. Anyone could partake in it; there were no barriers. He went further and built facilities like stalls and did not charge the traders for using them; an early expression of the concept of infrastructure and public good.

Nor did the prophet interfere with the pricing mechanisms or admonish those who made “excessive” profits. His central point was that such exchanges of goods and services must be voluntary between the buyer and seller.

The prophet believed in the free market in determining the price of goods and services, believing that is the only way to know of God’s will. In Islam, only God knows the actual price of everything, but Allah in His wisdom has chosen fit not to reveal that to any mortal. The market is the best temporal expression of God’s will. Adam Smith’s “invisible hand” could also be looked upon as representing divine guidance. The crucial point is that in the marketplace, the metaphorical “hand” remains invisible and not co-opted by the state or ruler. Price controls, whether mandated by government or fixed through collusion of businessmen, are not only anti-capitalistic but also un-Islamic.

The subsequent decline and inability to enhance a hitherto already viable Islamic economic system was attributed to the collective failure of later scholars and intellectuals to come to terms with the concept of ribaa (usury), and its flipside, credit. The difficulty is again related to that old familiar terrain of inability to differentiate between concept and content. Yes, usury is clearly unacceptable; it is stated so in many places in the Quran. At issue is the content of the concept, its meaning in the practical world of today’s commerce.

Islam clearly permits and indeed encourages the making of profits through trading. Islam is against making profits on trading over money, believing that such revenues and incomes are “unearned” and akin to gambling, and therefore sinful. Their inability to develop the concept of trading beyond the buying and selling of goods in the bazaar and to extend it to other legitimate economic ventures beyond simple trading stymied the economic development of Islamic societies. Muslim scholars were consumed with and constrained by precedence and obedience to traditions. Meanwhile Western intellectuals pursued those ideas and came up with modern capitalism.

An economic system like capitalism that produces so much benefit to so many for so long must be doing something right. No evil system would last that long, a fair and just God would not permit it. The ideals and objectives of capitalism are also very much celebrated within our Islamic tradition. That the West has picked up, enhanced, and then claimed them as their own is no reason for Muslims to disavow those esteemed values. It is time for Muslims to return to our roots and re-embrace free enterprise.


Next: Model Plural Society

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