Text Box: بسم الله الرحمن الرحيم Friday Sermon HAZRAT AMIR’UL MOMENEEN MUHYI-UD-DIN AL KHALIFATULLAH Munir Ahmad Azim 16 April 2010 (01 Jamadal Ulah 1431 Hijri) (Summary of Friday Sermon) After having greeted everybody with the Salutations of Peace, the Khalifatullah read the Tashahhud, Taouz and Surah Al Fatiha and then he said: When we look at the various economic structures in the world, we are bound to marvel at the perfection with which Islam has established its system, and those who follow it to the letter are bound to find themselves prosper instead of facing over and over again bleak moments. Like I mentioned before, I received several revelations, each being a repetition that the world shall be overcome by economic crisis, such a one which will be very difficult for the world to overcome it quickly. Prices of commodities will go up, inflation being rampant, and the prices of petrol on the national and international market will rise up exorbitantly. Now, we all know how these divine revelations have been realised and still are being realised, in different phases and stages. At international level, let’s take foremost America as example; we see how the supposedly “powerful” country has plunged into a deep net, unable to fully untangle itself from it. Crisis at different levels of the economy has seized the country, for example, there has been the real-estate crisis which exploded and engulfed mortgages, putting debtors in such dire situations, making them unable to pay their loans. Major Banks and financial institutions either collapsed or are on the verge of bankruptcy. This was a major downfall for them because as they were beforehand incited by the attractive subsidy packages and public announcements of anticipated profits, investment in this sector climbed up to the top. Thus, when the crisis came, the collapse of these institutions which also had branches and prospects all over the world was inevitable. Like the saying goes, “When America sneezes, Europe catches the cold and when this happens, the whole world is infected by this unpleasant cold.” The financial sector has incurred losses in some 300 billion dollars, if not more! This was due to the real-estate mortgage, if we only take America alone. For the outside world, more than 500 billion dollars loss was incurred. Customer confidence has been lost. That is why countries, especially the wealthy ones have made efforts to pump in more cash, in billions into the financial sector in the hope that it boosts confidence and provide liquidity for stimulation of economic activity. Countries like Britain did try to boost up confidence by nationalising some banks. We see that economic systems such as Socialism-Communism and even the Capitalist economy are both self-destructive, unlike the Islamic Model. The world has for so long combat the Communist Socialist System and now the Capitalist System is no better for even if it is slightly better than the previous ones, but it gives no actual hope for a lasting prosperity for the different sectors of the economy, be it at national level or international level. The free market economy and the laissez-faire which were once the loved economic system of the country were forced to be recognised as systems having their leaks also; their invalidity to reinvigorate the national and international market was obvious. As such, the different major countries of the world were forced to attend meetings to discuss the next move in the financial system. But will such efforts really save the capitalist economy as intended? Any observer of the Capitalist economic system can see that this system is on the verge of collapsing, if it has not already collapse. The efforts made by the capitalists to save the system is at best viewed as a positive prospect, but the system needs serious remedy instead of the patching which the capitalists are doing. There are four factors at the heart of capitalism that need immediate and foremost attention: 1. Gold as the monetary standard instead of the dollar. When the dollar had been taken as the monetary standard, this had rendered the economy weak, unstable, ever-fluctuating and thus unprepared for any economic shock. This is because the currencies of most countries are tied to the dollar instead of gold, regardless to the fact that the dollar cease to worth even the paper used to produce it. Even after the introduction of the Euro in the arena of the financial world, the dollar had retained its position for most of the currencies were tied to it. Therefore, the monetary standard should revert back to gold instead of the dollar for this would help in putting the economy under protection against all economic and financial shocks of different levels around all countries of the world. This economic shock if not tackled now can happen with any paper, and currencies of any country or rich state. 2. Interest-based loans result in great economic difficulties. Even though the original loan, or principle, gradually decreases in time with respect to the interest payments, individuals or states are unable to repay loans, in many cases. This results in a loan repayment crisis. Economic activity slows down due to the inability of many, or most, of the middle income bracket to repay loans and this effects production as well. 3. The system and practices in the financial markets and stock exchanges of buying and selling of shares, financial instruments and commodities does not require possession of goods. Rather these are sold and bought many times over, without being actually transferred from the original seller. This practice is invalid. It causes difficulties rather than solving them, because it inflates and depreciates prices of goods, even though the goods are not in possession. All this triggers shocks in the markets. Thus profits and losses accrue through various speculative means. These may accrue repeatedly, persistent and unidentified, until an economic crisis ensues. 4. A very important factor is also the complete lack of awareness of individuals about the reality of ownership, both in the East and the West. Under the communist socialist dogma, all ownership is concentrated in the state and, under the liberal capitalist system it is under the influence of the private sector, with no intervention of the state, simply because the liberal capitalist system encourages and support free market. This is further amalgamated and intensified by globalisation. When there is complete ignorance of the reality underlining these factors, this inevitably leads to shocks and crisis in the economy. This happens because the ownership rights should not be confined only to the public sector (the government at the head of any country) and the private sector. Instead, ownership should be divided into three, whose rights shall not be trampled upon, thus encouraging a just and right economic system, free of anxiety: 1. Public Ownership: which consists of solid, liquid and gaseous minerals, including petrol, iron, copper, gold, natural gases etc. found in the depths of the earth, all forms of energies and energy-intensive, and heavy industrial plants. These public resources should be managed by the government and their benefits should be distributed amongst the people. 2. State Ownership: which consists of the various taxes which are collected by the government, along with revenues for the state from activities ranging from agriculture, trade, and industry which are outside the scope of public resources. Thus, the revenues managed by the state should be spent on the expenses incurred by the state as a whole. 3. Private Ownership: which, unlike the above two is held by individuals and is disposed off in accordance to the Islamic laws. To recap, if these three ownerships were considered as one and held by only the private and public sector, without a proper reattribution of the riches, therefore crises and failures were bound to happen. This contributed in the fall of the communist economic system, for all ownership was held by the state. Such sectors which should be primarily controlled by the government were a success but failures were in such sectors which needed the participation of the private sector to boost the economy, like agriculture, trade and small to medium industry. Thus like in the capitalist economy, the communist economy faced similar downfall for all ownership were vested in the state whereas in the capitalist economy, all ownership were vested in the private sector, in free market and laissez-faire ideology, with the state taking distance with all activities therein. It even privatised those sectors which should have remained within the regulation of the state like petrol, gases, energy sources etc. Thus the downfall of this system was bound to happen, with repeated recessions, rapid collapse of sequent financial markets and institutions, one after the other. These are the reasons why initially the communist system failed, and now the capitalist one is on the brink of following suit in destruction. Without doubt, it is the Islamic economic model which is the sole cure to the crisis of all economic systems. Its establishment alone guarantees prevention against economic crisis. Islam holds the view that only gold and silver are to be set as monetary standard. Any currency paper-note issued instead of the monetary standard (that is, gold or silver) must be fully supported by gold and silver and it must be fully exchangeable on demand. Moreover, the currencies of each country should stand on its own, that is, it should not be tied to any other paper money of any other country. It should be fixed, unchangeable and has intrinsic value of its own. Furthermore, Islam has condemned interest or usury in all forms and has encouraged that loans without interest or surcharge over their original amount, be given to the needy to help them. In the Quran Allah says: الَّذِينَ يَأْكُلُونَ الرِّبَا لاَ يَقُومُونَ إِلاَّ كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا فَمَن جَاءهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىَ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللّهِ وَمَنْ عَادَ فَأُوْلَئِكَ أَصْحَابُ النَّارِ هُمْ فِيهَا خَالِدُونَ ۝ Those who devour interest do not rise except as rises one whom Satan has smitten with insanity. That is because they say: ‘Trade also is like interest;’ whereas Allah has made trade lawful and made interest unlawful. So he to whom an admonition comes from his Lord and he desists, then will that which he received in the past be his; and his affair is with Allah. And those who revert to it, they are the inmates of the Fire; therein shall they abide. (2:276) يَا أَيُّهَا الَّذِينَ آمَنُواْ لاَ تَأْكُلُواْ الرِّبَا أَضْعَافًا مُّضَاعَفَةً وَاتَّقُواْ اللّهَ لَعَلَّكُمْ تُفْلِحُونَ ۝ O you who believe! Do not devour usury, making it double and redouble, and be careful of (your duty to) Allah, that you may be successful. (3:131) وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ وَأَن تَصَدَّقُواْ خَيْرٌ لَّكُمْ إِن كُنتُمْ تَعْلَمُونَ ۝ And if any (debtor) be in straitened circumstances, then (grant him) respite till a time of ease. And that you remit it as charity shall be better for you, if only you knew. (2:281) In a Hadith reported by Abu Hurairah (May Allah be pleased with him), the Holy Prophet Muhammad (peace be upon him) has said: “There will come a time, he said, when you will not be able to find a single person in the world who will not be consuming interest (or usury). And if anyone claims that he is not consuming interest then surely the vapour of interest (In another text the dust of interest) will reach him.” (Abu Daud, Mishkat) Islam gives directives that the treasury, known as the “Bait-ul-Maal” be maintained by a separate body so that careful management of funds free of interest be loaned or given to the needy, farmers and merchants in order to help them. Similarly, Islam forbids the sales of good before the buyer takes into his possession the said good. By this, it prohibits transactions of goods without prior possession of the goods. It also forbids that there be transactions in financial instruments and its derivatives, and also in shares which result in invalid contracts, as well as speculative trading; all these are allowed in the capitalist economy in the name of freedom of ownership, but Islam is against them. According to the Islamic laws, such primary resources as petrol, minerals, energy sources, electrical energy etc. should be managed by the state and not individuals, companies and corporations. Likewise, lots of example can be brought forward to depict how in every way Islam has devised ways and means for the proper functioning of the economy in a just and fair manner, where individuals, the private sector and the state are all beneficiaries of the cake of the nation. Where there will be a fair distribution of the riches (primary resources and the revenues obtained from them) for the management of the economy, then the basic economic problems which exist in other economies deprived of the Islamic rulings would be barred from happening. Such crisis as witnessed nowadays in the capitalist economies of the world and the once affirmed communist economic system would not arise. This is the system established by Allah, our Creator and if we follow all His instructions and carve our society according to His rules, then are we not going to benefit from it instead of undergoing crisis over crisis in the name of capitalism? وَاللّهُ غَالِبٌ عَلَى أَمْرِهِ وَلَكِنَّ أَكْثَرَ النَّاسِ لاَ يَعْلَمُونَ ۝ “And Allah has full power and control over His Affairs, but most of men know not.” (12:22)