Re-Thinking Economics Part 11

Emerging Patterns from Shariah-Based Economic System

What matters most from this study is not to unearth ideal economic state of past Muslim civilizations. More importantly, we want to grasp the logic and pattern so we can chart a new manifestation of Shariah-based Economic System.

Crescent & Start Over Capitol by Eneas de Troya
Crescent & Start Over Capitol by Eneas de Troya

Shariah-based Economic System puts human nature at the very heart of its logic. Taking into account human’s cognitive and psychological biases, the system is designed to provide transparent feedback on the risk posed by the market.

Many safeguards and warnings were made against human greed. Yet at the same time it still have faith on human kindness and altruism.

With human individual nature dealth with, Shariah-based Economic System actually is more concerned with human as a social being and the wellbeing of the society itself. Anything that are onl beneficial to an individual at the expense of the society is prohibited. In other words, Shariah-based Economic System puts the society before the indidividual.

Trade is viewed as an extension of mutual aid thus greater emphasis was placed on real economic activities providing product and services. Making money from purely financial transaction is strictly prohibited. Because it is only real product and services (digital ones included) that can benefit humans.

We eat food — not numbers. Money are means for greater good, not the end in itself.

Although real product and services provide benefit to humans, too much of a good thing can be harmful as well. Thus the logic of SBES is to restrict consumption and curb consumerism.

The logic is that if an individual consumes too much of something, he is actually depriving others from benefiting from it. Seen from another angle, Shariah-based Economic System views that scarcity arises from human greed. Contrastingly, mainstream modern economic system promotes greed because of the fear of scarcity.

This thinking extends to the pattern of avoiding concentration of wealth. It doesn’t stop at that, Shariah-based Economic System even promotes redistribution of wealth through various means. At times it even ‘forces’ redistribution such as in the case of faraid.

It is not enough that wealth must not be concentrated and must be redistributed. In fact wealth and money must be highly liquid flowing fast and evenly throughout the society — whether through commercial or charitable transcation. The market also must be decentralized to avoid fragility in the system.

Shariah-based Economic System protects the market from fragility. Any measure that can fragilizes the system is prohibited. This includes but not limited to price control, ususry and large concentration of wealth.

Amidst all the economic -ism, what does Shariah-based Economic System most closely resembles? In short; Capitalism without Consumerism. The long one; Regulated Free Market Capitalism without Consumerism governed by Small Government.

Alhamdulillah, I think this more or less concludes this humble thesis of mine. The are many more tangential thoughts arising from this study but I will deal with it in separate writings.