Islamic Economics 101

Mar. 10, 2005  By: Vernon Richards, author of  ”Islam Undressed“

The renowned scholar Bernard Lewis tells us that Arabia was once, by middle-age standards, a great civilization. For reasons to be explored here, the hard facts on the ground today are that economies in predominately Islamic lands have been in steady decline for at least the last four-centuries.  It is common knowledge that the economic performances of Islamic lands are pathetic when compared to Western industrialized nations. The July 2002 U.N.'s "Arab Human Development Report," written by Arab intellectuals, painted a surprisingly accurate picture of Arabic societies. With a collective population roughly that of the United States , the 22 Arab states have:

·       A total GDP less than Spain 's, with exports (without oil) less than Norway 's, and per capita income less than one-sixth that of Western democracies (sorry, no credit for terror exports).

·       Fewer Internet connections per person than even Sub-Saharan Africa, and fewer books translated into Arabic over the past 100 years than even Spain translates in an average year.

·       No visible presence in main arenas of human excellence today — Nobel-prize winners, World Cup finalists, Olympic medal-winners, breakthrough scientists, leading historians, international business successes, internationally recognized leaders like Gandhi or Martin Luther King.

·       No democratic civil or political rights, sub-standard human rights for her own peoples, virtually none for women or infidels. No political visionaries of any kind. Instead what we see produced are more dictators and despots.

·       Dismal standard of living, few legitimate business or economic opportunities, poor health care, and education systems that churn out religious fanaticism and little else.

These sad facts are the hallmarks of a civilization devoid of legitimate, democratic government and free-market economies. Despite all the claims otherwise, neither quality nor longevity of life are by-products of fundamental Islam. The reasons for this poor performance is obvious to everyone except the poor inhabitants of these areas. Numerous human social experiments in communism and pure socialism have shown convincingly that when you remove freedom and economic incentive, productivity and innovation languish. If it were not for the oil in the ground, the productive output of Arab lands would be at the bottom of undeveloped third-world countries. Except for a handful of fortunate countries with massive natural resources (oil), all majority Muslim countries fall into the category of economically "less developed nations". But the reasons for this go beyond the lack of free-market opportunities and mechanisms. The continuing lack of Muslim economic success is a direct result of a culture and practices dictated by oppressive Islamic principals. The lack of innovation and growth is a direct result of incompetence, corruption, or over-regulation on the part of ‘religious’ governments. The condition is obvious, even to Muslims, but the root causes are not so easy for otherwise intelligent Muslims to identify. The usual reaction is both typical and predictable, …the West must be at fault, nothing bad could possibly come from the worlds ‘best’ religion. Within this construct, the only solution which can be proffered is to return to more pure Islamic values, and to attack Western hegemony with Jihad. As such, the erroneous diagnosis and prescription guarantees a continuation of the patients predicament. This culture of blame can not produce either introspection nor reform. Indeed, in terms of achievement, Arab leaders lack standing to criticize any country, culture, or society. Without excellence in any endeavors today, Arabs look silly as they continue to disparage others and export misery and terrorism. This destructive cycle continues endlessly, ensuring only the continuing economic disadvantage, frustration, and misery of its participants.

By contributing to order, honesty, and fairness, a progressive religion can be an asset to the economic well being of citizens. But when a ‘religion’ propagates ignorance, inefficiency and poverty it becomes a liability to host societies. Like other totalitarianism systems, Islam acts as an economic hindrance, placing barriers to ambition, prosperity, and fulfillment of human potential. With Islamic education focused (as a political necessary) on indoctrination, and with other Islamic control mechanisms in society, the kind of education which might lead to significant economic reform is not offered. Only a tiny minority of the most privileged escape to western institutions, and then usually choose to stay in the open societies who host them. Then there is the fact that half the population (women) are prevented from getting an education, entering the workforce, and contributing to industry. Instead women are regulated to being nothing more than servants to their husbands and baby factories for Islam.

Paying large percentages in alms is also a heavy burden, as is the personal and social burdens associated with caring for large numbers of minors. Contributing to support local and distant Jihads is also expected. In fact the opportunity to donate sons and money is irresistible to many Muslims, the following reveals why;

The Prophet said: "Whatever one spends to facilitate Jehad, Allah shall give him a reward which will exceed his contribution 700 times." (Tirmzi, Vol.1, p.697) "He who reared a horse for the sole intention of using it in a Jehad, then he will be rewarded one virtue for each grain he gave the horse as a feed." (Ibn-E-Majah, Vol. 2, p. 172) "A martyr (in Jehad) is dressed in radiant robes of faith: he is married to Houris and is allowed by Allah to intercede for seventy men (i.e. he is authorized by God to recommend seventy men for entry into paradise, and his intercession is sure to be granted.) (Ibn-E-Majah, Vol. 2, p. 174)

Consider also the productivity effects of a limited workforce who are interrupted 5 times a day for rather lengthy compulsory prayers, and who fast all day for weeks on end (40 days/year). Then for merchants, there is undoubtedly fear of providing services or products not in complete conformity with rigid, canonical Islamic restrictions. Such realities are not exactly conducive to market expansion and employment.

Because of the Islamic prohibition to usury (interest rates attached to monetary loans), any who manage to acquire wealth in Islamic lands have no incentive to invest in or otherwise finance new businesses ventures. This prevents the flow of capital to fund other companies or start-ups, effectively killing the entrepreneurial spirit.

Of even more significance is the general Islamic disrespect when contracting to non-Muslim entities. Non-Muslims quickly learn of the propensity of Muslims to break contracts for self gain, and act instead to protect their own capital investments by avoiding such adventures in financial recklessness. Opportunities for cooperation and profit disappear when comes to be known that Muslims are taught my Muhammad himself that covenants with infidels can be broken with impunity if it serves the best interest of Islam. But business behavior between Muslims also suffers from an Arabic culture which is tribal and hegemonic. All such self-destructive business conduct flows as a natural extension of the example exemplified by the caravan raiding Muhammad. The Islamic and/or Arab morality that glorifies dishonesty and cunning to get gain results in suspicion instead of trust. It is a fact that when you remove trust from business relationships, nothing much will happen. Because personal or institutional risk becomes untenable, things like long-term-investment, shared-vision, common-goals, cooperative-projects, and group-achievement become impossible.

The net result of all these Islamic cultural effects on markets and industry make economies based on it much less than competitive in a world economy based on open markets, freedom, and business law not based on the Qur’an. Lands hamstrung by Islamic principals and culture seem guaranteed to fail competitively, producing only the kind of desperate uneducated, unenlightened core material required to produce ever more Jihadic foot soldiers. Another consequence of the Muslim model is that the trappings of superior economic models in adjoining non-Muslim lands are thereby guaranteed to be superior, which more often than not produces jealousy and bitter animosity, if not fodder inspiring conquest and plunder. It is a bitter pill for Muslims to see inferior ‘Infidels’ enjoying bountiful fruits of their industry while large numbers of ‘brothers’ and their families flounder in relative poverty. Such feelings of jealousy and outrage also further stoke the flames of angry, expansionist Islam. The restricted, repressive economic model of Islam is the root cause of poverty and economic stagnation in societies based on it, but the blame is easily shifted to ‘repressive’ neighboring peoples and religions. So Islam itself seems designed to perpetrate both the root neediness, and the goals and methods which the political movement must employ to satisfy those needs (conquest and plunder) …how terribly convenient. But what else can we hope from the example of a man who could only show his followers how to assassinate and plunder enemies to get gain. Muhammad never created wealth through legitimate means, yet he became very wealthy, but only at the expense of a host of hard-working innocent victims. His example and revelations were intended more to help himself in recruitment efforts aimed at men he sought to participate in his core business. His cut of the exploits were profitable whether he participated in the murder and plunder or not. Of course, not everyone can be a bandit, much larger numbers must toil the soil and produce/improve the lands and merchandise to make the system work for the few thugs who benefit from such an unsustainable system.

If good-hearted, intelligent, and hard-working Muslims can not quite find enough humanistic reasons in the example of Muhammad and his devout followers worldwide to leave the religion, then one might hope that pure economic self-interest will do the trick. On almost every plane of human existence (spiritual, economic, intellectual, emotional, physical) Islam is a heavy ball-and-chain preventing both individual and economic progression. Forced obedience to any cult through fear, coercion, ignorance, and lust creates vice instead of virtue, stagnation instead of growth. My heart goes out to all the good families trapped in Islam. May they all find the means and support necessary to survive the ordeal until enough of their fellows gain sufficient enlightenment and strength to wrest their lands and families from the blight.