Read the Friday Sermon Below:
وَ اللّٰہُ غَالِبٌ عَلٰۤی اَمۡرِہٖ وَ لٰکِنَّ اَکۡثَرَ النَّاسِ لَا یَعۡلَمُوۡنَ
“And Allah has full power and control over His Affairs, but most of men know not.”(Yusuf 12: 22).
The World Economic Crisis
A great global economic crisis is in sight in the wake of this new century. And this danger is already present in these times of psychosis due to the deadly coronavirus, Covid-19 and its variants. But that was just the straw that broke the camel’s back...
Twenty years ago, the world experienced many crises. There was also the real estate crisis that erupted in America and dragged in its wake all those involved in mortgage transactions, rendering debtors unable to repay their debts. Thus, major banks and financial corporations either collapsed or were on the verge of bankruptcy. [Ditto for our time with the advent of Covid-19 which has left individuals, small businesses, large companies, financial markets and governments in a great scare that has threatened the proper functioning of the global economy]. Spurred on by attractive subsidy plans, coupled with public announcements of possible hefty profits, international banks and investment funds rushed into the industry and the crash of US banks and financial institutions spread around the world. In other words, as the saying goes, America’s sneeze has infected the rest of the world who also caught cold. [And this pattern was repeated during the Covid-19 pandemic where the world really took a cold, as well as during the very recent blockage of hundreds of cargo ships on the Suez Canal, handicapping demand and supply around the world which is already affected by the Covid-19 pandemic. Each day of blockage affects at least $9 trillion in goods.]
In short, the whole important foundation of the capitalist economy - the free and laissez-faire markets, the very doctrine of the capitalists - has been demolished. The end of the twentieth century and the beginning of the twenty-first century were tragic. The years 2007 to 2008 experienced a global banking crisis. A law has already been passed to prevent any limitation of financial markets. As a result, the invalidity and corruption of this doctrine had become so blatant, even for the main protagonist of capitalism, i.e. the United States, that they announced the intervention of the state apparatus in the financial markets with the approval from Congress and the Senate to breathe new life into the economy by investing Trillions of US Dollars to redeem treasury bonds issued by troubled banks and financial institutions in the mortgage market. And as soon as the plan was approved, the Treasury Secretary Henry Paulson rushed to implement it. This shows that after the failure of the socialist-communist system, it is the turn of the capitalist economic system to find itself on the death bed!
These
elements sparked a movement on a global level. Thus, four of the major European
countries, in this case, France, Germany, Great Britain and Italy met at a
meeting during which they called for a larger meeting in order to review the
whole financial system. The question arose, “but
will such efforts really save the capitalist economy?”
A simple observer of the reality of the capitalist economic system can easily see that the system is on the brink, if not already collapsed. Whatever strategies the capitalists put forward to save their system, they can only assuage its pain immediately, at best, for the reasons for this collapse require a deep analysis of its pillars rather than a simplistic exercise.
Four factors at the heart of the capitalist doctrine deserve to be scrutinized: the elimination of gold as the base currency and its replacement by the dollar at the same level at the end of the Second World War, in accordance with the Bretton Woods Treaty/ System. Ditto in the early 1970s when gold was completely replaced by the dollar as the monetary standard, which made the world economy susceptible to any financial shock from the United States. This was because the currencies of most other countries were all gripped to the dollar instead of gold when the very value of the dollar note was no more than the paper it was printed on.
Even
after the Euro entered the global financial arena, the dollar generally held
its position as most currencies continued to hold onto it. It is for this
reason that gold must become the base currency again in order to prevent other
economic crises which could no doubt be repeated, and to any other economic shock
of the dollar which would automatically affect the economies of other countries
and even that of America. Likewise it can happen with any currency of an
influential state. The loans which are struck by interest are the source of
great economic difficulties. Even if the initial loan amount gradually
decreases over time with the interest rate payment, in many cases neither the
individuals nor the state are able to repay the loans; which then causes a loan
repayment crisis; and the slowdown in economic activity, due to the inability
of those in the middle class to repay their debts, which also affects
production. The system and practices in financial markets and exchanges, where
stocks, financial instruments and commodities are traded, do not require
possession of goods at the time of transactions; rather, these are sold and
bought multiple times without actually being transferred from the original
seller. This practice is unfounded and causes difficulties rather than
providing solutions, as it inflates and depreciates the prices of goods
although they are not affected. All of this causes instability in the markets,
so profits and losses accumulate through various speculative means that go
unnoticed until an economic crisis emerges.
It is clear that there is a total ignorance among thinkers from the East to the West about the right to property. Under socialist-communist ideology all property belongs to the state and under liberal capitalist ideology the free market is advocated. And this state of affairs is further complicated and becomes more intolerable with globalization. Complete ignorance of this reality causes economic upheavals and crises. It should be noted that property rights cannot be manipulated by the state and the private sector alone, because there are three types of property:
Public Property: This includes solid, liquid and gaseous minerals including petroleum, iron, copper, gold, natural gases, etc., which are found in the depths of the earth and all forms of intensive energy from the industrial factories. These public properties must be managed by the state and the profits distributed to the people.
State Property: This includes the various taxes collected by the state, as well as income from agricultural, commercial and industrial activity outside the sphere of public property. The state uses these revenues for public spending.
Private Property: Unlike the two types of property I just mentioned, this is owned by individuals and managed according to the rules of Shariah [Here I am talking about Islam and Muslims; Islam being the best system that can regulate the economy of the world]. If all of these properties are brought together and held by the state or the private sector [or both only], crises and failures are inevitable. This previously caused the collapse of the Communist economic model because they had handed over all ownership to the state. In the communist economic system, sectors which naturally had to be run by the state were successful - such as the oil and heavy arms industry, etc. On the contrary, sectors like agriculture, commerce and small and medium enterprises, which must naturally be held as private property, were a disaster and caused the ruin of the communist system.
Likewise, the capitalist economy has failed and
inevitably finds itself on the brink of disaster, especially with the global
shock with the onset of the coronavirus, Covid-19. It is because it has
conferred public properties such as gasoline, gas, energy sources, the heavy
and even strategic arms industry, on individuals, businesses and companies, and
the state has remained away from the markets without really owning things for
which it is the legitimate controller/ owner. It was done in the name of the
free and laissez-faire markets, as well as globalization and the natural and
inevitable results being repeated recessions, the rapid collapse of one
financial market followed by another; ditto for corporations/ societies. This
is how the communist ideology failed and now it is the turn of capitalist
ideology to suffer the same fate.
Indeed, it is the Islamic economic model alone which can provide solutions and even prevent such economic crises because from the outset Islam has [made the provisions to block] blocked the road to all the factors that could cause economic problems.
Islam advocates that only gold and silver – and nothing else – to be the monetary norm and wherever the currency is in paper form, it must be backed by gold and silver and even be converted on demand. Therefore, the paper currency of one country should not be gripped to that of another country; rather, the currency of each state must be independent and have its own fixed, unalterable and intrinsic value.
Islam further banned interest in all its forms and allowed loans to the needy to help them without charging any interest or surcharge on the amount loaned. Islam requires the treasury, the bait-ul-maal, to have a specific branch to provide interest-free loans to the needy and to farmers to help them.
Islam also prohibits the sale of goods before the buyer takes possession of them, and does not allow transactions where the sellers do not have possession of the goods. Also prohibited are transactions in treasury bonds and their desires, stock market actions resulting from invalid contracts as well as speculative trading that is practiced in the capitalist economy, in the name of freedom of property. In addition, Islam prohibits individuals, companies and corporations from owning publicly owned goods such as petroleum, minerals, power sources, electric power etc. and obliges the state to manage it in accordance with the rules of the Shariah.
Thus, the Islamic economic system has addressed and
provided solutions to all economic problems and crises arising from human
cruelty. This is the system authorized by the Creator of the universe Who knows
what is beneficial to His creation.
Establishing a Well-Balanced Economic Order
O Muslims! Allah (swt) has blessed you and elevated you to a rank of honour through the Deen of Islam, which He has revealed to His Messenger (pbuh) and has also warned you of this. It is through Islam that you have been raised as the best nation by Allah (swt) for all mankind and it is through the application of this Deen that your honour and prosperity resides. This prosperity is not for you alone, but for all mankind after all that it has endured and suffered [i.e. all kinds of oppression] under human laws.
Moreover, the implementation of this great Deen that is Islam, will not be done by
concealing it under the covers of the Book [the Quran], but by establishing a
state which executes it and carries its message to the world - the Islamic
state - Al-Khilafah (i.e., with the
advent of a Khalifatullah with the
Holy Spirit, a caliphate) based on the model of prophecy (Nabuwwah) which will bring back a blessed, healthy and secure
life. But do you think that while you stay warm in your comfort, Allah (swt)
will not send His angels to you to establish the Islamic State? On the
contrary, we have been commissioned just like the prophet (pbuh) who had
established the [Islamic] state in Madina, and his companions (ra), as well as
their true followers, have always followed his Sunnah.
O Muslims! Look forward to this blessing, get ready
and come forward to work with the Jamaat Ul Sahih Al Islam and support us
[Indeed, our greatest support is Allah]. Seek the grace of Allah for a party
which Allah has blessed and so that the promise of Allah to grant authority and
succession, as well as the good announcements made by our beloved prophet
(pbuh) regarding the reestablishment of the Khilafat
on the footsteps of prophecy[Nabuwwah],
be carried out.
O Muslims! O those who have Taqwa and follow the straight path, you are the vanguards [protectors and soldiers] of this world and those who most deserve to rule it. Insha-Allah, Ameen Summa Ameen.