By Naseerah Nanabhai
Radio Islam spoke to Muhammed Yesilhark, the trustee of the U.K. National Zakaah Fund, to answer to understand why Capitalism has failed globally.
According to Yesihark, Capitalism as a system has not lived up to its promises and this has become a glaring fact for all economists and therefore opening the door to other possibilities and "time to change the rules."
He explained that to bridge the divide between rich and poor and that Islam teaches us to take a problem and break it down to the core. When doing this, we reach two fundamental problems - the problem of interest and the non-availability of zakat. These come from two forces that underpin capitalism.
One being “let others work so that I can enjoy my life” and the other being “ why would I work if others can do it for me”. These problems are being reinforced by interest and the non-availability of zakat. A system where your money doesn’t grow discourages hoarding.
We need to understand that in the Dunya, everything rots and dies, this is true for all living creatures but it is also true for material things too. An example - you create wealth and purchase a house. To ensure that the house does not fall into ruin, you must spend money to maintain it, the same applies to other assets, like a car and bicycle, etc. The only thing that could possibly not die or get finish or work against the rule of entropy is something mankind has designed, i.e money.
Money invested in a bank will not rot or be consumed, however, it will increase due to the system of interest. Thus, any item you purchase will lose value but the value of the money remains. This encourages hoarding and widens the gap between the rich and the poor.
Moving from the notion of a debt based system, compared to an equity-based system, will have a significant impact. As stock enters the system, to ensure that it does not spoil or lose its value, it will be sold or consumed. He went on to further explain that returning to the gold standard can still be considered, this would be the first step to fundamentally addressing this issue.
Looking at the ideal Islamic economy currently, Muhammed responded by saying that as economies were complex systems the answer was a complex one. He did, however, say; "once you solve the problem of interest and non-availability of zakaah, the difference and behaviour between and amongst the poor and the rich will automatically change”. He added that if systems like this were in place, it would rid people of envy and instil a degree of compassion toward each other, thereby solving the problem, however, to design and implement such a system was very complex.
Referring to an article he had written on revising tax policy, he responded to the question of how this system would work and where would governments obtain their resources from. His explanation was that not taxing meant a larger amount of funds were being squeezed from a smaller number of people to sustain a larger group. This is the reason behind the high taxes in many countries. The opposite of this should be done if we want to move away from capitalism.
Essentially, by taxing the rich or taking from the bigger pot, it eliminates a lot of problems. We need to think of zakaah as something that we give centrally and locally. This will ensure that individuals distributing are also part of this category. The government will be responsible for collection and distribution.
For zakaah to have the best impact, these are the criteria we need to take into consideration - zakaah needs to be local, central and distributed by organisations dedicated to this function only. As a community, we need to ensure that these organisations are maintained, well-run and well governed.