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WTO Successor to GATT:
Implications for The muslim world
Within a short span of time a number of economic blocs have emerged on the world horizon. In this race, all countries-developed, developing and underdeveloped-are included. Members of the North America Free Trade Agreement (NAFTA) and the European Economic Community (EEC) are primarily of the developed countries, while the Economic Cooperation Organization (ECO) and the Association of South East Asian Nations (ASEAN) are of the developing and underdeveloped Asian countries.
The role of government in the economy
The recent past has seen fundamental changes in the government's role in the economy. With the defeat of socialism and the worldwide onslaught of privatization, a new scenario is emerging. The direct role of government is shrinking and its indirect role is increasing. Arguably, privatization does not necessarily mean "no government," but rather "better government." As a result, the following new issues are emerging: What is the extent and nature of government regulation in the economy? How can government play an effective role in the redistribution of economic power and still keep the free market economy undisturbed? What structural changes are necessary to protect the public interest? How can government itself be regulated? How can we prevent government from becoming an instrument of injustice and tyranny? The present paper seeks to discuss these questions from the Islamic perspective.
The Benchmark Issue in the Islamic Financial System
This paper identifies a major lacuna in the conceptual development of Islamic financial market operations. It argues that in the absence of a well developed benchmark that would facilitate macro- and micro-level decision making with regards to cost of capital and opportunity cost of investments in comparative projects of similar risk, Islamic financial institutions are relying on interest rate-based indices such as the London Inter-Bank Offer Rate (LIBOR) to make lending decisions. The author contends that this is clearly unacceptable since Islam disallows a predetermined or fixed rate of capital. The paper then proposes a benchmark based on Tobin's q theory of investment. The author further maintains that unlike existing alternatives which are limited to macro-level applications only, the q-based benchmark would be useful for firms and banks (micro-decisions) as well as governments and institutions (macro-planning).
An Introduction to Islamic Economics
It is perhaps desirable to preface the review of a book with a brief description of its form and content, more so in the area of Islamic economics, where formal writing structures have yet to evolve and much diverse material tends to be treated under similar, even misleading, titles. Akram's book opens with an erudite foreword by Khurshid Ahmad. The text contains six chapters of uneven length spread over 111 pages. Two appendices, notes and references, a select bibliography to help further research, and a couple of indexes constitute its remaining portion.
The Introduction is a neat, petite work. Simple language, a lucid style, an uncompromising stance, and reliance on original sources are some of its notable features. It has not a few seminal ideas and some outlandish ones as well. The vast coverage inevitably is at some expense of depth and detail.
Economic Doctrines of Islam:
Dr. Haq's book belongs to the same group of issue-oriented studies in Islamic economics that Umar Chapra's1 books do. However, unlike Chapra, who first provides a critical evaluation of the failed modern economic systems and then establishes the supremacy of Islam's economic development strategy, Irfan Ul Haq starts out with a comprehensive expository analysis of Islamic economic doctrines. He then relies on extensive personal interpretation to derive and then justify various policy prescriptions for the promotion of economic growth in an Islamic economy.
The book contains four parts, which are divided into fourteen chapters. The first five chapters in the first two parts discuss Islamic methodology and Islam's social and political order. The book's major theme is included in the third and fourth parts where the author discusses most of the economic issues and policies. Since the controversial policy-oriented economic subjects are covered in these parts, I will concentrate on the evaluation of these major economic subjects. These subjects include the proper role of the public sector, fard al-kifayah and its implications, interest
free financing, land ownership and tenure, taxation, poverty, employment, and the policies to provide economic essentials.
Privitization and the Ethics of Islam
Current privatization efforts dwarf all which have gone before. In general, the "less developed" nations, including peoples of the Muslim faith, seem to have attracted the advocates of privatization. Disturbing results are obtained when the substance and process of privatization are juxtaposed to the teaching of Islam.
In certain cases, privatization may result in the transfer of wealth from relatively weak hands (i.e., from the debtor governments of the less developed nations) to relatively strong hands (i.e., consortia of international entrepreneurs). Islam teaches the opposite: It recognizes the right of the less able in the wealth of those who have greater ability or the opportunity to produce greater wealth (Mirakhor, 1989).
The outcomes of privatization are important to peace and security. Consequently, the emergence of privatization as a cat's paw in political discourse is not a good omen. For example, Abdelhak Benhamouda, Algeria's labor leader, "opposes any privatizations undertaken on the 'back' of the workers and demanded (sic) 'guarantees' from the government" (AFX News, 1995).
The article defines privatization and discusses its structural and operational problems in light of religious imperatives.
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