Discourse on Parameters of the Islamic Economic System
Assalamu ‘ Alaikum .
We invite you, brothers and sisters to this Online Discourse entitled Parameters of the Islamic Economic System. Please give your opinion and contributions to this Discourse in the Comments section below. Our common desire is to arrive at the consensus Islamic Economic model to replace the existing system now . A Discourse on an Islamic Economic Model must as a matter of course discuss among other things the Islamic Monetary System , the Islamic Financial System , and the Islamic International Trade Settlements System . We welcome all views including views from all aspects including economics, finance , Shariah , academic , social , political, practical, and Islamisation of Knowledge, etc.
At the end of the discussion we will summarize what is our model of the Islamic Economic System in sya Allah . Please invite your friends, associates and contacts you feel can contribute thoughtfully to this Discourse .
To begin the discussion we append below what we believe are the Basic Parameters of an Islamic Economic System , as well as the associated questions .
In the name of Allah, and peace and blessings be upon our beloved Prophet Muhammad s.a.w.
Let the Discourse begins .
Parameters of the full Islamic Economic System :
1 ) Monetary System – Money backed against Gold, Silver and Fulus subject to the supervision of an International AlHisbah Organisation
a) How about Nations who do not possess gold in the beginning?
b ) Is it true what economic historians charged that under the previous system of the Gold Standard it was very tough for countries in recession to pull out of recession because they do have not enough gold / money to pay for projects to stimulate economic activities ?
c ) Can money be backed against a country’s GDP, determined and regulated by the International AlHisbah Organisation?
2) Banks do not exist ; what exist are Investment Institutions and Payment Institutions.
– Investment Institutions serves to receive investments under the principle of Mudarabah and Musharakah , and they invest in companies also under the principle of Mudarabah and Musharakah . To prevent fractional reserve banking from taking place they are not allowed to operate current accounts. All cash transactions must be through a current account with the Payment Institution .
– Payment Institutions handles the National Payment System without ability to invest or extend credit . The aim is to prevent fractional reserve banking from happening. They operate current accounts and payment system ala debit card system and are paid fees as their income .
3 . There are no debts in this system , neither in deposit taking nor in financing ; all are made on the principles of equity , i.e. mudarabah and musharakah ?
– How do we tackle the question of housing and vehicles ?
4 . International trade is settled on the basis of the Gold Exchange System . Imports and exports of the two countries are net off and the settlement is made only on the balance . If all countries agree their gold is to be kept at one location then net transfer of gold will be replaced with a book entry transfer under the supervision of the International AlHisbah Organisation.
5 . Who serves as the International AlHisbah Organization ? The system is assumed to commence with Islamic countries, so this Organization and its headquarters will be determined by Islamic countries under Mushawarah