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The Economic Crisis and the Only Solution

crisis_mundialThe term ‘crisis’ (in Arabic) means ‘hardship’, linguistically speaking. It means in this subject the hardship which is difficult to solve except through exhausting the effort. The term ‘economy’ means saving, which is opposite of extravagance. The word ‘economy’ is originally derived from an old Greek term, which means looking after affairs of the home, where its capable members associate in producing food and performing the services, while all of its members associate in utilizing what they earn. However, people developed the meaning of ‘home’ here to mean the community that is governed by the state.

Therefore, the meaning of the word, economy here is not its linguistic one; it is rather its traditional one, which is running affairs of the funds, whether by increasing them and securing their creation, where this is discussed in economic science; Or by the manner of its distribution, which is dealt with in the economic system.

Thus the economic crisis means severe turbulence in the management of financial affairs of the state, which requires spending of the utmost in the effort to remove that turbulence and bring situation back to normality and balance. Economic crisis does not mean a mild imbalance in the financial affairs, which can be treated by the ordinary means. For this imbalance is usually expected in all of life’s affairs, and can be treated and tolerated within accepted limits.

For an ideological state that follows a proper view-point of life, it is not possible to ignore a mild imbalance that develops into a crisis. Therefore, the ideological state treats it from its start, so that the solution is easy and feasible.

Since we all know that an economic crisis is the severe turbulence in the management of the financial affairs of the state, it is incumbent upon us to know the first instance the manner which the state manages its financial affairs. Then, we have to explain the chances of occurrences of crisis in these matters, and then explain their treatment. To understand this, it is necessary to study few factors that have a great effect on the economic situation of any state.

Treatment of Economic Crisis

Having explained the reality of the economic crisis, we begin to explain the correct solution of this crisis.

Firstly: Addressing the crisis caused by the current monetary system.

We have stated previously that the monetary crisis could occur in the Gold-exchange system as well as the system of compulsory paper money. In order to eliminate the crises we have mentioned, reference has to be made gold directly, or by bank notes representing gold that are convertible into gold unconditionally. Many economists have realised this. Had not the relevant states, especially America opposed the return to gold standard, fearing for their loss of political and economic hegemony, the world would have returned to it. That is because this is the system that preserves stability and leads to prosperity in economic activity without the domination of one state over another. In this system, currency is defined by a standard unit recognised and respected by the whole. In this system the State also cannot increase the money supply unconditionally, because they are bound by the requirement of gold reserves. This is in contrast to the mandatory paper banknotes where the state could, when needed, issue the quantity they want to serve their own interests, a matter that leads directly to monetary inflation and weakness in the confidence in the monetary units. However, following conditions have to be observed in this system:

  1. Freedom of export and import of gold by all countries without restriction or condition.
  2. Absolute freedom in exchanging the paper money that represents gold into gold at any time, by their full value written on them.
  3. Freedom of smelting and coinage of the yellow metal (gold). So, whoever possesses gold money, he could melt them and coin them into gold bullion without restriction. Likewise, whoever had gold alloys could go to the Department of minting money and mint golden money (after paying the expenses of the minting process, in order to prevent any possible disruption between the official and commercial price of gold.
  4. This is from the angle of abstract economic research. But from the view-point of Islam, it is invalid to have money other than gold and silver, due to relevant shar’i evidences.

Economic crisis means severe turmoil in the management of the financial matters of state, which requires effort to remove it.

The crisis resulting from currency occurs in the gold-exchange system due to the political and economic domination of the state that owns the reserve currency over that other state. It also occurs in the mandatory paper (fiat) money because they are subject to price fluctuations and speculations among nations, and to financial conspiracies that led to political and economic unrest and economic collapse in financial markets. The treatment is to over revert to the system of the gold standard, which preserves exchange rate stability and economic prosperity.

The crisis resulting from the balance of payments due to deficits leads to indebtedness. Economy is not self-stimulated and the loans are misused, particularly as the loans are fought with danger of extending influence; and also because of usury which is prohibited in Islam. Resources to the IMF complicates the problem because it treats it as an abstract mathematical equation, and demands increase to taxes devaluation of currency, freezing or reducing wages and salaries, and removal of subsidies, besides increasing prices. It’s said to develop projects, which instead of developing the wealth of the state makes it unable to dissociate itself from aid and loans. Thus, the country would enter into the indebtness trap, from which it cannot escape. The maximum that a country that follows the IMP programme can achieve is the rescheduling of its debts rather than abolishing them. Besides it facilitates the taking up of new loans, thus accumulating debts, such that it cannot find a way out of them as is happening with all the countries currently dealing with these programmes.

Regarding the resolution of the crises of unemployment and poverty resulting from the ill-distribution of wealth or from its insufficiency, this is achieved by the State, as well as the imposition of financial maintenance for the incapacitated males and to the females due upon their mahram (close relatives). If such maintenance is not available, the state is responsible for such people by giving them what is adequate to meet their basic needs, from the bait-ul-maal (House of wealth). Otherwise, it is given from the taxes levied upon wealthy Muslims, and taken from the surplus of their funds.

The state services the basic needs of the whole nations as it services this for each and every individual. The basic needs of the individual are defined as; food, clothing, and accommodation; all according to prevailing standards. The basic needs of the whole nation are: education, health care, and security. These needs, in both cases, are fulfilled from the funds of the Bait-ul-maal if available, otherwise from additional taxes.

The constant revenues of the Bait-ul-maal, besides their supplements are: War booties, spoils, land zakat, head tax, all of the public properties and state properties of the lands, building, utilities, customs taxes, illicit funds of the rulers, and State officials, illegally earned funds, fines, a fifth of the buried treasure, minerals, property of those who have no heir, funds of apostates, charity funds – Zakat, and then the taxes (where essential). The revenues are usually sufficient for the state’s needs, particularly through running the economic activities properly.

The Khilafa state, that will soon be established, by the Will of God, own the proper solution to all the problems , whether economic or otherwise, because it is a state in which sovereignty belongs to God and authority belongs to the Ummah (community). It has one Khaleefah who adopts the Shar’i rules and is given pledge of allegiance on the Book of God and the Sunnah (way) of His messenger. Thus, he and the ummah are fearful of God in all of his actions. So, life will be organised according to the orders of God, and will prosper in all of its affairs.

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About Imran Ali

IMRAN ALI, is an up-coming writer and columnist. His studies were interrupted when he, as a child of 14, simply told his father M. Sulemen, a businessman, that he just can't get what his school teacher teaches paying little attention to the weak students of the class. So, on a promise that he'll 'study at home' he never again saw the face of the school, though he carried his studies well to fullfill the promise of his; his experience as a volunteer(a dedicated social worker) provided him with material for his articles and writings. He first gained attention with ''Aurangzed as he was'' and ''New world Order 'Vs' Just world Order'' (September 2011, The Companion, English monthly, and several other magazines), probably his finest articles. Next 10 year he coming with his debut novel, and is fully dedicated on it's research. Taken together, his articles present a broad, naturalistic picture of Indian life. His subjects include History, the Indian peasantry, the bureaucracy, life of a downtrodden Indians and have nots, the emotional problems of the different classes, and, ominously, hallucination, Very new in Style and to Approach, Combining psychoanalysis with human behaviour. His writings well captures the collective psyche of the world as a whole. He's been a district level boxer. Known as a peoples magnet in his vast friends circle, and a booklover who humorously with pride discloses, '' I've read over hundreds of books relating to arts, literature, science, metaphysics, naturopathy and psychlogy. So, the conclusion here is easy to derive, that i, who was raised from childhood in a modern muslim belief have been mostly preferring reading all kinds of books rather than writing!'' His reading since childhood, has been mostly centered around knowing the truths[truth here means of all kinds humans ever categorized, mysteries and human psyche has given me a better understanding of the human soul, mind and spirit in collaboration with my Islamic teachings.] Since he started his reading at the age of 15 reading Stories of literary giants, like Leo tolstoy, George Orwell, and Guy de muppasant and many Indian masters like Sir Mohammed Iqbal(The Poet Of the East), Margret Marcus, Leopold weiss, and Manto. And their collective influence made me search for my own moorings, adapting my father's style of srorytelling. In the beginning, there was nothing magnificent in acquiring all this, from books, as it was nothing more beside his own interest, and his interest to help morally deprived and confused men he used to meet in parties and gatherings. And amazingly, only a few years back, an up an coming, extraordinarily talented writer and one of his closest friends of his, who always loved his ideas gave rise to a writer hiding somewhere inside him. When while sipping the tea he insisted him to collect his ideas in a diary which keep on counselling youngmen of varieties every third day resulting in a great interruption in our appointed informational communication. Suddenly, at the very instinct, the idea occured in his mind of writing down these ideas effectively, concisely and pertaining to the questions of todays' youth who are short of time resolving them. And with him as his inspiration, he picked up the pen, and started unfolding, writing in the name of the architect of this whole universe. Which is none other than ''Allah.''

10 comments on “The Economic Crisis and the Only Solution

  1. “But from the view-point of Islam, it is invalid to have money other than gold and silver, due to relevant shar’i evidences.”

    What is the evidence?

  2. Abū Bakr ibn Abi Maryam reported that he heard the
    Messenger of Allah say: “A time is certainly coming over
    mankind in which there will be nothing (left) that will be of
    use (or benefit) save a Dinār (i.e., a gold coin) and a
    Dirham (i.e., a silver coin).” [This prophecy clearly
    anticipates the eventual collapse of the fraudulent monetary
    system now functioning around the world.]
    (Musnad, Ahmad)

  3. Abī Sa’īd al-Khudri reported Allah’s Messenger as saying: “Gold for
    gold, silver for silver, wheat for wheat, barley for barley, dates for
    dates, and salt for salt. (When a transaction is) like for like, payment
    being made on the spot, then if anyone gives more or asks for more,
    he has dealt in Ribā, the receiver and the giver being equally guilty.”
    (Sahīh, Muslim)
    The above Hadīth of Prophet Muhammad (sallalahu ‘alaihi
    wa sallam) has very clearly established three things:
    Firstly, it established ‘money’ in Islam to be either
    precious metals such as gold and silver, or other commodities
    such as wheat, barley, dates and salt which are commodities of
    regular consumption as food but which have a shelf-life. Thus, 15
    when there was a scarcity of gold and silver coins in the market
    in Madina, commodities such as dates, which were available in
    the market in abundant supply, and which had a shelf life, were
    used as money. Consequently, we can now answer the above
    question.
    The unequal exchange of camels for camels was
    permissible since animals were never used as money. An
    unequal exchange of dates for dates had to be prohibited,
    however, because dates were used as money, and permission
    for such an exchange would open the door for a moneylender to
    lend money on interest.1
    If the same principle concerning the use of commodities
    such as dates as money, were to be applied in the Indonesian
    island of Java, for example, then rice could be used as money if
    gold and silver coins were to be in short supply in that market.
    In the island of Cuba on the other hand, sugar could be used as
    money, etc.
    Some scholars of Islam argue that mankind is free to use
    anything, even a grain of sand, as money. Therefore, there is no
    prohibition to printing paper and assigning any value to the
    paper. Our response is that grains of sand or shells found on the
    seashore cannot qualify in Islam as money according to the
    Hadīth since they are neither precious metals nor or they
    commodities that are consumed regularly as food. 16
    Secondly, when gold, silver, wheat, barley, dates and salt
    (rice, sugar, etc.) were used as money, the value of the money
    was ‘inside’ the money and not ‘outside’. Hence, the Hadīth
    established ‘money’ in Islam to possess intrinsic value.
    Thirdly, money was always located within Allah’s
    creation in a commodity that was created by Allah Most High,
    with value assigned to it by Allah Most High Himself. He
    declared of Himself that He was al-Razzāck, the creator of
    wealth.

  4. Allah Most High referred to a Dinār in this verse of Sūrah
    Āle ‘Imrān

    “Amongst the People of the Scripture (i.e., the Torah) there are those
    who if entrusted (by a fellow Israelite) with a Qintār (a treasure of
    money such as a heap of gold coins) for safe-keeping, would return it
    upon demand. Yet amongst them there are those who if entrusted (by
    a Gentile, i.e., one who was not an Israelite) with a (single) Dinār (a
    gold coin) for safe-keeping, would not return it on demand unless the
    owner were to persist in demanding the return of his property. The
    reason for this (double standard) is because they argue that the
    (religious law) placed no obligation on them to be just and fair in their
    dealings with Gentiles. But they tell a lie against Allah (Most High),
    and they know full well (that it is a lie).”
    (Qur’ān, Āle ‘Imrān, 3:75)

  5. Our purpose in this essay is to explain, briefly of course,
    how and why the disappearance of Sunnah money has occurred.
    We ask that those who read, understand and agree with the
    arguments presented in this essay, respond to the following
    command of Prophet Muhammad (sallalahu ‘alaihi wa sallam):
    Abū Sa’īd al-Khudri said: I heard the Messenger of Allah say:
    “Whosoever of you sees (anything that is) evil, let him change it with
    his hand; and if he is not able to do so, then with his tongue; and if he
    is not able to do so, then with his heart; and that is the weakest (state
    of) faith.”
    (Sahīh, Muslim)

  6. “I have lived under different systems of life and have had the opportunity of studying various ideologies, but have come to the conclusion that none is as perfect as Islam. None of the systems has got a complete code of a noble life, Only Islam has it and that is why good men embrace it. Islam is not theoretical; it is practical. It means complete submission to the will of God.”
    [HERBERT HOBOHM (now Aman Hobohm)::: German diplomat, missionary and social worker. An intellectual who has been serving the German diplomatic missions in various parts of the world. He embraced Islam in 1941.]

  7. “I have lived under different systems of life and have had the opportunity of studying various ideologies, but have come to the conclusion that none is as perfect as Islam. None of the systems has got a complete code of a noble life, Only Islam has it and that is why good men embrace it. Islam is not theoretical; it is practical. It means complete submission to the will of God.”
    [HERBERT HOBOHM (now Aman Hobohm)::: German diplomat, missionary and social worker. An intellectual who has been serving the German diplomatic missions in various parts of the world. He embraced Islam in 1941.]

  8. Islam is not just a religion consisting of certain rituals, it’s a complete code of life which takes care of each and every aspect of human behaviour and activity, and provide complete guidance in all spheres of life.

  9. If this solution had been proposed in the name of some worldly “ism”, like capitalism, socialism, etc., it could have gained the favor; but being propounded by Islam, this so-called secular world is too biased towards Islam to see it through a secular eye and appreciate it for its own merits.

  10. the american economy is totally uplifting the white people while degrading the black ,so in the name of american financial tactics they are captivating there own citizens.
    recently numerous racial discrimination events have come up.

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