[Islam-Online- Economy]

As mentioned earlier, the tasks which confront denationalizers are enormous. (For example, Egypt's Public Enterprise Office will dispose of $45 billion of state assets via commercially-based holding companies.)
Denationalization has long-term effects: once accomplished, denationalization becomes virtually irreversible. Moreover, it is impractical to issue guidance as to the selection of an optimum technique for privatization. The technical difficulties are compounded by a shortage of experienced privatization managers, particularly, persons with the vision required to succeed in culturally diverse situations.
The most important challenge to implementers of privatization is posed by the national ethos of the host nation. Where a choice has been made to denationalize, the model of the process (i.e., its nature, timing, and extent) is greatly influenced by cultural, technological, and social factors.
The ethical awareness of some implementers may differ sharply from that of the hosts. For example, disciples of Milton Friedman, the University of Chicago economist, may have been misguided into viewing profit generation as the basic objective of business. Friedman's views have been decried by ethicists as well as by leaders of business. For example, Margaret Downes, the deputy governor of the Bank of Ireland, has noted that some have described Friedman's views as amoral. In my view, Downes has used the correct adjective.
With respect to a related matter, the U.S. Financial Accounting Standards Board has issued "concept statements" which aver that the objectives of financial reporting are to provide information to "decision makers," identified primarily as investors and creditors. Other stakeholders, including regulators, workers, suppliers, members of the community, and taxing authorities, are largely disregarded with respect to their financial information needs. Contrariwise, from an Islamic perspective, U.S. financial reporting could be regarded as substantially irrelevant, because of its preoccupation with two categories of decision makers that are likely to be scarce in developing nations.
Muslims perceive problems with absentee shareholders: Islam obliges business owners to be concerned activists, especially with respect to the welfare of their employees and the preservation of the environment. Islamic theologians tend to be suspicious of stock transactions; they fear that the issuers may have gained some of their profits from interest?based financial deals, contrary to Islamic law. Conservative Muslims may even regard share trading as a form of (prohibited) gambling.
Also, privatization advocates have been known to ignore the employment circumstances of developing nations which may require national, provincial, or municipal governments to serve as employer of last resort. Furthermore, the act of denationalization may incorporate hidden disincentives. For example, it may curtail pre?denationalization public employment which may have brought benefits through policies designed to protect women and minorities.
The operational difficulties of denationalization will be discussed before an attempt is made to reconcile privatization, a free market technique, to Islam.

Economy Next Back End