Top leaders of the world acknowledge the fact that a deep economic depression is encompassing the entire world and scores of economists and politicians cite the core ideas of the economic system of capitalism as a root cause of the problem. The G8 leaders in their meeting in Italy in July 2009 stated in the G8 Leaders Declaration: Responsible Leadership for a Sustainable Future: “We remain focused on the economic and financial crisis and its human and social consequences” . This crisis prompted scholars like Francis Fukayama to blow the siren on capitalism and democracy. He wrote in his article “The Fall of America, Inc.” :

Along with some of Wall Street’s most storied firms, a certain vision of capitalism has collapsed. How we restore faith in our brand. The implosion of America’s most storied investment banks. The vanishing of more than a trillion dollars in stock-market wealth in a day. A $700

billion tab for U.S. taxpayers. The scale of the Wall Street crackup could scarcely be more gargantuan. Ye t even as Americans ask why they’re having to pay such mind-bending sums to prevent the economy from imploding, few are discussing a more intangible, yet potentially much greater cost to the United States—the damage that the financial meltdown is doing to America’s brand.

University of Massachusetts economics professor Richard Wolff breaks down the root causes of today’s economic crisis, showing how it reflects seismic failures within the structures of American style of capitalism itself . Professor Wolff declares that the current crisis is the greatest crisis of capitalism in his lifetime. He suggests that more fundamental changes need to be made to avoid future catastrophes.

The current economic crisis and the score of criticisms targeted at capitalism point to one important trend in the contemporary history of systems and ideologies; that is the downfall of capitalism.

Yet another trend which captures the attention of scholars as well as politicians is the one related to the rise of political Islam and the quest for the reestablishment of an Islamic model of governance and economy in a large geographic span of the world. The most explicit reference to this trend is made by Noah Feldman in his book The Fall and Rise of the Islamic State . Feldman argues that the Islamic state which fell in 1924 is being 4

reconstructed today. He states:

In both symbolic and practical terms, the Islamic State died in 1924. Ye t today, the Islamic State rides again . . . The trend is with them. In Muslim countries running the geographical span from Morocco to Indonesia, substantial majorities say that the Shari’ah should be the source of law for their states. (Feldman, pp. 2)

Another account of the “rising Islam” trend is depicted in a recent article published by Patrick Buchanan in the Townhall.com online magazine under the title “An Idea Whose Time Has Come”5. Pat Buchanan wrote:

But today, tens of millions of Muslims appear to be . . . returning to their roots in a more pure Islam. Indeed, the endurance of the Islamic faith is astonishing. Islam survived two centuries of defeats and humiliations of the Ottoman Empire and Ataturk’s abolition of the caliphate. It endured generations of Western rule. It outlasted the pro-Western monarchs in Egypt, Iraq, Libya, Ethiopia and Iran.

Islam easily fended off communism, survived the rout of Nasserism in 1967 and has proven more enduring than the nationalism of Arafat or Saddam. Now, it is resisting the world’s last superpower.

The published material on either of the issues—the fall of capitalism or the rise of Islam—is notably large. What is not common in the literature is to have both issues discussed in the realm of the same platform. Recently, the “fall of capitalism and the rise of Islam” was a title of a conference convened in the Chicago area. The conference generated mixed reactions from both Muslim and non-Muslim communities. It is interesting to note that when each dimension of the subject is discussed separately, the reaction is far less dramatic than when both issues are addressed simultaneously. The combination of both topics provokes scores of Blogs, Twitters, sites, and media commentaries. It is this combination which will be the subject of this book.

It is also uncommon for Muslims to be involved in the political discussion on the fate of capitalism. Students of political science, history, theology, and global movements are accustomed to reading the accounts of socialists, communists, academics, and think tank politicians on the plight of capitalism. But rarely we find Muslims addressing this issue from an Islamic perspective. This book will provide an account of capitalism from the perspective of a Muslim and the viewpoint of Islam.

The most recent crisis of the capitalist economic world did provoke several inquiries into the Islamic economic alternatives. But those inquirers continue to be made in search of temporary fixes for an ailing economy instead of looking for a comprehensive economic system with different foundation and structures than those exhibited by capitalism and socialism. One objective of this publication is to present a comprehensive view of Islam as an ideology which comprises economic, political, and social system as well as a system of values and ethics, all coupled with a spiritual filling of the human soul.

This book is not an outgrowth of the “clash of civilizations” as prophesied by Samuel Huntington . Rather, it is a depiction of an ongoing trend in the global arena; see figure 1. On one side, the ideologies of nationalism, socialism, and capitalism either have faded or are still fading. On the other side, the grounds for the rebirth of an Islamic state governed by the Shari’ah of Islam continue to strengthen.

The financial crisis is not a new phenomenon in the world of capitalism. The United States and Europe have gone through several recessions and/ or depressions for the last hundred years. Unlike all crisis and turmoil of the past, this time around, the financial crisis raised serious concern about the plight of capitalism, the backbone infrastructure of the current financial and economic system. When stock and commodity markets hit rock bottom in 2008, capitalism was viewed as seriously sick. As astonishing as history could be, the Islamic Ottoman State was viewed as the sick man of the world in the late nineteenth century; then, capitalism was emerging as the healthy splendid one. Today and after a long century of success, capitalism is becoming the sick man of the world; Islam, now, is emerging as the healthy and splendid one.

The Financial Times ran a series of articles titled “The Future of Capitalism.” Economists, politicians, and philosophers saw the Great Recession of 2007-09 as a historic watershed and produced new visions of a changed capitalism. Chief economics commentator at the London Financial Times Martin Wolf makes the following conclusion in his article “This Crisis Is a Moment, but Is It a Defining One?” :

My guess is that this crisis accelerated some trends and has proved others unsustainable. It has damaged the reputation of economics. It will leave a bitter legacy for the world. But it may still mark no historic watershed. To paraphrase what people said on the death of kings: “capitalism is dead; long live capitalism.”.

Leszek Balcerowicz, a former Polish deputy prime minister and governor of the National Bank of Poland and a professor at the Warsaw School of Economics, believes that the current crisis points to a potential weakening of capitalism. He concludes in his article “This Has Not Been a Pure Failure of Markets” that capitalism’s most serious enemy is from within. In his words, “Dynamic, entrepreneurial capitalism has nowadays no serious external enemies; it can only be weakened from within.” This is a direct reference to inherent defects at the core foundation of capitalism which can turn into a failure. A failure, as is the case in complex systems, results from a fault, which is activated by a trigger, and, if not contained or isolated in due time, will lead to a failure. In this sense, dormant faults or defects are the enemies from within.

Perhaps, the most intriguing argument in favor of capitalism was made by Edmund Phelps, director of the Center on Capitalism and Society, Columbia University, and winner of the 2006 Nobel Prize in Economics . Nevertheless, Edmund recognizes that a serious damage has been impacted against capitalism, such that “restructuring is required to make capitalism work well again.” Sir Martin Sorrell, chief executive of the world’s leading advertising and marketing services group WPP, makes the following conclusion in the Financial Times article “The Pendulum Will Swing Back”10: “It must be said plainly that capitalism messed up or, to be more precise, capitalists did.” He claims, however, that “just as the crash was inevitable, so will be the pendulum swinging the other way.”.

It has become customary for economists, politicians, and thinkers to claim that traits such as greed and fear were behind the current financial crisis and economic downturn. In a more general case, prominent thinkers and politicians put the moral crisis behind failure at a larger scale. Zbigniew Brzezinski, the former national security advisor in the Carter administration, warns that the United States has lost the moral compass which is necessary for the United States to sustain its world leadership. In Brzezinski’s own words, “The moral standing of America has been tarnished . . . the absence of moral convictions leaves opportunities for demagogy that exploits sudden crises and new fears”11.

Jimmy Carter addresses the deepening moral crisis in the United States in his book “Our Endangered Values: America’s Moral Crisis”12. His theme is summarized in the following words: “Extensive and profound are the transformations that are now taking place in our basic moral values, public discourse, and political philosophy.” Scores of economists, politicians, and commentators attributed the current financial crisis and economic downturn to lack of moral values and ethics in the market. According to Barack Obama, “we excused and even embraced an ethic of greed . . . we encouraged a winner-take-all, anything-goes environment”13. GOP presidential candidate John McCain said the financial crisis was caused by “greed, corruption, and excess . . . as Wall Street treated the American economy like a casino”14. George Bush cited corporate greed and market excesses when he claimed that “Wall Street got drunk”15. Ralph Nader says he predicted the current Wall Street crisis, which he believes to be caused by “pure greed”25. Reflecting on events taking place on Wall Street, a reporter for CNN made an unusually bald statement: “Markets are run by two things: fear and greed.” Oskari Juurikkala, a researcher at Institute of International Economic Law in Finland, wrote “Greed Hurts: Causes of the Global Financial Crisis”16. Oskari states that the current economic crisis proves that “greed is evil,” in reference to the fact that greed is one of the main causes of the current crisis. John Steele Gordon, an author who specializes in financial and business history and the author of An Empire of Wealth: The Epic History of American Economic Power sites greed, stupidity, and delusion as main factors in the current financial crisis17.

In an article published by the Wharton School of the University of Pennsylvania, the following account was given to the root cause of the crisis: “To explain the current economic crisis, the world of finance has a particular lexicon—including, for example, credit default swaps, mark-to-market and securitized subprime mortgages. Psychologists, on the other hand, might use very different terms: hope, greed and fear”18. The archbishop of Canterbury Dr. Rowan Williams blamed “human greed” for the financial crisis. He joined Muslim leaders from around the world in calling for world leaders to work together to prevent the burden of the financial crisis from falling on the weak and the poor19.

How could Islam be an alternative to capitalism? In what capacity is Islam being investigated? Isn’t Islam just another religion like Christianity and Judaism? What type of “rise” are we talking about if Islam has been with us for the past fourteen hundred years? These and many more questions will be addressed in this book in part 2. But before we do so, let’s see how Islam has been directly tagged and brought into the picture since the financial crisis began to sweep the world over. In so many reports, discussions, and forums, the Islamic financial practices have been cited as the most stable and immune in the current crisis.

Perhaps the work of Charles Tripp Islam and the Moral Economy: The Challenge of Capitalism is the most relevant in this respect, since he places Islam in a direct contrast with capitalism26. His argument is that capitalism has greatly influenced the Muslims’ behavior in the past few decades. Today, the trend is in the opposite direction. Islam is sought to modify practices in the world of capitalism. The intrinsic properties of Islam will be explored to see why and how Islam can contrast capitalism.

In an article published by the New York Times on December 24, 2008, James Joyner reports that the global financial crisis has been a boom for Islamic banks, which avoided much of the damage from the subprime mortgage crisis by following strict principles laid out in the Quran. French finance minister Christine Lagarde has promised to make adjustments to the regulatory and legal arsenal to enable Paris to become a major marketplace in Islamic finance; she said, “Western financiers could learn a thing or two from the Islamic world as global leaders try to establish new principles for the international financial system, based on transparency, responsibility and, moderation”27. The US deputy treasury secretary Robert M. Kimmit, during a visit to Jiddah in Saudi Arabia, was quoted to have said that experts at his agency have been learning the features of Islamic banking28. Islam is being considered more of a solution than a problem. Majed al-Refaie, the head of Bahrain-based Unicorn Investment Bank, explains the reason for this shift: “The beauty of Islamic banking and the reason it can be used as a replacement for the current market is that you only promise what you own”28. Although this is too simple as an explanation to the phenomenon of the rising of Islam, it does point to the direction of a new trend.

The Islamic Development Bank organized a forum on the global financial crisis on October 25, 2008. The forum debated whether the Islamic finance can help inject greater discipline into the current financial system and reduce financial instability29. It has become customary for international forums and organizations to discuss the potential contribution of Islam to the stability of the current financial systems.

Ossi V. Lindqvist, former rector of the University of Kuopio in Finland, argues that Islam has in the past contributed to the advancement of science and technology in Europe30. His presentation at a conference held in Finland in October 2008 provoked a debate on the ability of Islam to contribute to the current financial crisis in the Western world.