The Global Financial Crisis by Hizb ut-Tahrir Britain

Perhaps the most startling aspect of the crisis is that it is in fact a human rather than financial crisis. It is real people that are losing their homes, jobs and savings, yet the headlines focus upon the mechanics, the companies and the dollars. This spills over into Government policy which in this crisis has focused on preserving companies and an elusive commodity called “confidence” in the system, not the individual. The irrational emphasis upon growth in GDP at all costs and misplaced notions of the trickle down positive effect of growth to the poor in society have been proven repeatedly to be false as the division between the wealthy and poor in Capitalist society continues to widen.

The first principle of economics in Islam is to meet the basic needs of ALL the people in society. The economic problem is described as one of distribution, not production. We do not lack resources and wealth in the world, yet the drive for constantly increasing production which has been unequally accumulated has led to massive levels of poverty even in the most developed countries. Islam does not discourage success and throughout history many Muslims and non-Muslims living in the Caliphate were very wealthy. The difference lies in the responsibility of both the state and the individual to ensure that all in society have at the least their basic needs of food, accommodation, clothing, health and education. In a narration from Prophet Muhammad (Peace be upon him) he said that:

"The son of Adam has no better right than that he would have a house wherein he may live and a piece of cloth whereby he may hide his nakedness and a piece of bread and some water" (Tirmidhi).

This forms the basis of the Economic system of Islam, all policies and rules are geared towards achieving such ends. Where the extended family unit is unable to, and only when it is unable to, the state will act to ensure that the basic needs are met. The poor and indebted are included in those that are eligible for zakat payments (an enormous pool that the wealthy contribute 2.5% of unused wealth to). This is in contrast to free market Capitalism which is focused towards increasing Gross Domestic Product (GDP) a very misplaced measure of progress. People have rightly asked why there is no bailout of the 100’s of thousands now losing their homes in the US housing crisis, or those losing their jobs in the recession. The urgent governmental response has been to bailout banks and provide liquidity to the banking system. Major banks cannot be allowed to fail but individual failure is widespread and acceptable. Governments cite the need for restraint when re-negotiating public sector and essential service pay rounds that do not even reach the level of inflation, claims that would cost the public purse a few millions. Yet hundreds of billions, indeed trillions of dollars are ploughed into the banking system with undue haste, and little understanding of the assets held on the banks balance sheets. Islamic Shariah dictates that the State provides a backstop to ensure the basic (and only the basic) needs of all are met, and has no responsibility to bailout private companies at the expense of the State and public. Nationalisation of public banks is also against the Shariah which clearly distinguishes between state, public and private ownership.

Rich countries have fallen seriously behind in living up to their promises to increase aid, debt relief and access to their markets for exports from developing countries. The Millennium campaign announced in 2000 to solve poverty by 2015 is at the half way point but is sadly falling behind in terms of the promised payments and the proposed results. Although promising to meet a welcome, but still inadequate, increase in aid to reach a 0.7 of one per cent Gross National Income target most nations are falling badly behind the targets21.

We are also witnessing an attendant falloff in the likelihood of poverty eradication targets being met, particularly in sub Saharan Africa22.

The financial crisis has made the disparity between concern for big business versus concern for human life very clear, when very modest anti poverty measures extending over a period of 15 years cannot be met, but 10’s and 100’s of billions of dollars amounting to several percent of GNI can be rustled up over a weekend for bank bailouts. Islamic law dictates that the sanctity of life takes precedence, and the strict requirement to meet ones contractual commitments both individually and by the State is also set out as the Quran commands:

[Translated Meaning Quran Al Maidah: 1]