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Free Market Society
Should a society be allowed to have a free market as in capitalism whose side effect causes a great inequality of classes. Is the system of zakat introduced by Islam enough to re-concile the issues generating from capitalism.
Ghamdi sb often says that se should not follow any isms. As they are all extremes. But societies do have to choose or make a system. Whats the best system in which islamic teachings can be followed in today’s time
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4 Replies
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Free Market Society
updated 3 years, 10 months ago
3 Members
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4
Replies
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Brother, I think free market or capatalism is the Islamic way. If combining this with Zakat, honesty in business and following of other principals of Islam will make it a perfect economy with better distribution of wealth and with equal opportunity for all.
Due to differences in people in terms of intelligence, effort or inclination towards business, there never be or can be or should be equal distribution of wealth. But there will be no extremes and there will be opportunities for those who want to work hard.
I think what creates economic inequality is manipulation of market, limits on trade, laws or absence of laws in favor of some, absense of Zakat and interest based lending system that favors rich.
I can elaborate further, but it will be a long essay.
Basically what is called a free market is not actually a free market but rigged towards rich. A free market should be totally free throughout the World with minimal laws only to keep dishonest in check.
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Capitalism is based on two principles:
1. A market place that allows open competition ie a place where buyers and sellers can have a value for value exchange with free consent. This is exactly what is essential for transaction to be lawful in Islam.
2. maximize shareholders value.
The 2nd principle does not seem to be aligned with islam as it emphasis on maximizing consumer value by infaaq and amal e hasana. Therefore in my view if the return on investment has a floor and a ceiling as per the market, the capitalistic system will become more islamic.
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I do not think there should be a floor or ceiling to make it Islamic. Just honesty. If someone uses market manipulation, fake news or hoarding to get an edge to maximize profits, then that need to be stopped…not a ceiling on honest prophits. Also should be stopped is to take unfair advantage of the market and exorbitant profiteering due to situations like shortage of food, natural disasters, etc. This is no different than hoarding and against Islamic principals.
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Hmm. I guess you are right. I need to think more on this issue.
What bothers me here is that accumulation of wealth is not encouraged in Islam and a shareholder has this very objective of earning more. On the other hand a fair value for value exchange (trade) is lawful in Islam. So if a shareholder adds value to a business and get returns as per market that seems aligned with the underlying principle of trade but windfall gains in a monopolistic environment even tho he has not done anything wrong does not seems to be justified. If the benefit is passed on to consumers it would look a better moral act but i am not sure i need to think deeper. Happy to discuss it over whatsapp.
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