In Capitalism, the property is controlled by private owners for their profits and interests. In a capitalist economy, factories, mines, and many other assets are owned and controlled by capitalists.
They purchase labor for money wages. Owners of wealth determine decision-making and investments which results in the accumulation of capital. Although Capitalism has many benefits, due to uncontrolled freedom of private property, which is the root cause of all its ills, it has utterly failed to establish social justice. Due to the unequal distribution of income, the poor get poorer and the rich get richer and a class struggle takes place.
The founders of Socialism had claimed that, in their opinion, they wanted to end the injustice done by the capitalist economy. But they failed because they could not diagnose the real ills of that system.
Socialism, while trying to uproot the basic problems of the capitalist economy, went to another extreme and declared the right to private property as altogether unlawful.
As the result, an enormous number of people lost their ownership over factories, shops, trade centers, and agricultural lands. Millions of people were rendered penniless within a short period of time.
After 74 years of wrestling with economic challenges, when Socialism fell as dead wood, with dozens of countries getting freedom from its tentacles, the world witnessed that economy in the Socialist countries had already got ridden on death bed. Red-tape and corruption had eaten into the vitals of the economy. Socialism had to face a tragic end because it was not consistent with fundamental principles of human behavior.
Instead of the ailing teeth of the patient, Socialism had plucked out all the healthy ones. Hence when in 1991 Socialism as a system of economy breathed its last, the former President of Russia, Boris Yeltsin, had to regret that instead of Russia, had Socialism been tested in an African country, the world would not have lost 74 years in finding out its bad consequences.
Socialism had claimed to expose and end the false claims and injustice of Capitalism. But it proved to be the worst and most worthless system of the economy. As the result, it faced a terrible and disgraceful end.
Right now, the situation is that Capitalism is alone to monopolize the economic front. After the disintegration of the USSR, the world fast assumed the position of a global village. Capitalist countries have already started filling the void with a New World Order based upon a Capitalist economy with the claim that the failure of Socialism was actually the triumph of Capitalism over it.
But history has kept its records. So far, like Socialism, Capitalism has not succeeded in addressing the basic requirements of social justice. Consequently, it has to face the same fate as Socialism faced. Any system, howsoever glittering it be, will have to face failure if it is against the nature of man and the principles of justice.
In the field of economics, industrial relations constitute an important subject. These relations are constituted between an entrepreneur and laborers and make long-lasting impacts on society.
This can be understood by the fact that it was the gross imbalance in the same entrepreneur-labor relations due to which socialism turned the world upside down. Even today the same interrelationship between the entrepreneur and the laborers remains the most sensitive and unsolved problem of trade and industry.
The unending struggle between the entrepreneur and the labor continues in the form of strikes, shutdowns, and demonstrations. Sometimes the same struggles result in the complete closure of factories, and the unemployment of laborers, and even nations have to suffer when the same situation continues for a longer period of time.
Therefore, safeguarding economic activities from such struggles and making industrial relations balanced, just, productive, and result oriented is the basic need of every economic system.
The world is at crossroads now. It is looking forward to a just and balanced economic system to deliver from the extremities, injustice, and delusion of both Capitalism and Socialism.
We are in dire need of a system of economy based on the principles of social justice and the welfare of man. That economic system must be in accordance with the nature and basic needs of man.
Islam and Economy
We must see what guidance Islam provides in order to establish a just and balanced economic system.
What is the impact of that guidance economy? And why did other systems of economy fail to fulfill those requirements that the economic system of Islam does?
I would like to divide my discourse into two parts in the next few write-ups regarding the principal characteristics of an Islamic economic system.
To be continued…
Dr Nazir Ahmad Zargar, Assistant Professor and Coordinator, Department of Religious Studies, Central University of Kashmir, Ganderbal
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.