During the blessed month of Ramadan, the attention of Muslims turns to the wealth that they have accumulated during the previous year. An account is made and the obligatory alms (zakat) is calculated and paid to the deserving. In addition to the obligatory alms Muslims will often pay voluntary contributions (sadaqah) to those that need help but don’t fall within those to whom zakat can be paid. Muslims realise that sadaqah and zakat are central to the ethos of Islam, making Muslims the most charitable nation on earth.
But this charitable spirit is contextualised in a capitalist world where no amount of charity is going to solve the problems of poverty because in this capitalist world the accumulation of wealth into the hands of the few is encouraged and abetted by the policies of state and ideology.
With the payment of a relatively insignificant sums of money, large corporations can register themselves in tax havens and avoid paying tax, so Amazon.com which has total revenues of £11b in the UK in the public records has only paid £1.7m in tax, and this according to the laws of the land is completely legal because sales are routed through Luxembourg. Although this may seem benign, it gives the likes of Amazon, McDonalds, Starbucks, Costa Coffee etc an unfair advantage over their local competitors, who pay up to 40% of their profits in tax which inevitably means higher prices and ultimately leading to their closure and the accumulation of profit in the hands of major corporations and their institutional shareholders. Smaller businesses enrich their local communities as they earn and spend in their locality instead of whisking away profits into the accounts of distant shareholders.
The largesse that capitalist states bestow upon the wealthy doesn’t stop at tax. In fact, corporations, especially financial institutions, benefit from handouts that far exceed those paid to the often maligned poor and needy. During the 2008 financial crisis, which was the result of excessive risk and profit taking by financial institutions, the UK government made £500b in loans and guarantees available to banks. Subsequently some of these loans and investments, via shareholdings, have since been sold back to the market at huge losses to the taxpayer, which in effect amounted to an astronomical subsidy to bank shareholders and officials and a decade of austerity for the general public with the associated increase in poverty.
The situation internationally is even worse, poverty is not as we are told the inevitable result of over population and corruption, but rather it is a direct result of the capitalist system prevalent in the world today.
Whilst pretentious claims of charity and aid are made by Western nations, the reality is that $192b is siphoned off by Western companies and institutions from Sub-Saharan Africa alone: this dwarfs what is given in charity and aid, and although the received wisdom is that corruption is the main cause of poverty, in fact the tax avoidance, repatriation of profits, interest on debt and other “legal” means are the main culprits of capital flight from Africa and the rest of the third world.
The word legal is of course a loaded term, with the political interference of the Western capitalist world, via dictators, coups and the corrupt political elites of the developing world, corporations are free to manufacture whatever rules and regulations that provide them with the best opportunity to steal the resources of these nations. Hence despite record levels of growth, poverty and desperation endure in these lands and no amount of charity will cover the hundreds of billions that leave these lands destined for Western banks.
Although Islam encourages the giving of charity it does not stipulate that charity is the main mechanism of poverty alleviation. Rather it recognises that the issue of poverty is not simply of charity, but is rather the result of the lack of distribution of wealth. Hence, Islam brings a plethora of societal and financial regulations that create a society which prevents the accumulation of wealth in the hands of the few and ensures its circulation and distribution.
Where indirect taxes, like sales tax in the capitalist world, result in disproportionate amounts of the poor’s wealth to be taken as tax, zakat on the other hand is taken from accumulated wealth, even if that wealth is sitting in a foreign account. The notion of tax havens is alien to Islam as what is important is not the location of the wealth rather its ownership hence the wealthy cannot escape paying their dues.
From the prohibition of the joint stock company to the laws of inheritance, Islam discourages the formation of mega corporations, which by their very nature concentrate trade and wealth in the hands of the few. The company structure in Islam encourages small and medium enterprises and the personal and family ownerships. Hence, nameless shareholders residing in far off places are not siphoning off wealth from local communities. Rather people work, earn and spend ensuring the distribution and circulation of wealth.
The administration of the Islamic state will also have the correct view of Western corporations. Instead of viewing them as magnanimous institutions that invest in poor countries, they will be viewed as tools of belligerent nations, which impoverish weaker nations. Foreign companies will not be allowed to exploit the natural resources and basic utilities of the nation. Rather Islam stipulates that these are public ownership and their profits are for the bait-ul-mal not destined for foreign bank accounts.
Charity alone will never be enough to alleviate poverty, as it is enshrined in the system’s rules and regulations of capitalism. Rather the root and branch removal of capitalism and the imposition of Islam is the only solution.