Greek economy goes bust with a debt of €300 billion. The subsequent cuts sparks riots as the people pay for the banks’ disastrous risks
The systemic failures of capitalism are all too apparent and all to frequent to be ignored as mere blips. Elastoplasts and bandages are hastily being applied to plug gaping holes in the so-called intricate framework of modern capitalism yet as one hole is temporarily blocked another even bigger emerges.
Just as the western world came together to avert a collapse of the global financial system in 2008 within a couple of years another colossal joint effort involving the G7, G20, European Central Bank and the IMF is underway to prevent contagion in the Eurozone following the effective debt default by Greece. The Eurozone is to receive a 750 billion Euro bail-out package to prop by countries on the verge of default.
Commentators sitting comfortably in Western economies have never really questioned the horrendous damage – loss of lives and wealth – caused by capitalism largely because the developing world was on the receiving end of the pain and suffering.
The contagion affect of free trade in the 1960s and 1970s decimated large swathes of third world agricultural activity, with the convenient exception of cash crops, which were used to pay third world debt to western banks and parasitic institutions such as the IMF and World Bank.
The free movement of capital flows in the 1980s and 1990s raised stock and foreign exchange markets in the developing world to phenomenal highs before bringing them crashing down with local investors suffering irrecoverable losses of wealth.
These awful effects were always in far off lands and hurt people who could do little to force their despotic and corrupt leaders to stop emulating the West.
However, with Western economies on the brink of collapse no longer can the inherent injustices and systemic flaws in capitalism be brushed under the carpet.
The financial crisis in 2008 that caused the longest and deepest recession since the Great Depression exposed the innate fragility of capitalism to the West. Capitalists turned to failed state socialism pouring hundreds of billions of debt, paper money and taxpayer funds to rescue western economies on the brink of enduring depression.
Having bailed-out the systemically flawed banks and financial institutions western states have inevitably exposed themselves to sovereign debt default. Non more so then Greece. The Greek debt crisis has precipitated a collapse in the Euro – the European single currency – and is on the verge of spreading to other European countries – the most vulnerable being Portugal and Spain.
Capitalist economies, weighed down by huge Governments debt, are at best on the abyss of a double-dip recession without the fiscal freedom to address the huge social welfare costs in unemployment and increasing poverty that will inevitable follow. At worst, whole economies are on the verge of debt default and economic and political ruin. Riots in Greece protesting against fiscal austerity have led to deaths already.
This interdependent string of ruinous events has laid bare the inherent weakness of capitalism and reminds us of Allah (swt) saying:
مثل الذين اتخذوا من دون الله اولياء كمثل العنكبون اتخذت بيتا وان اوهن البيوت لبيت العنكبوت لو كانوا يعلمون
The parable of those who take protectors other than Allah is that of the spider, who builds (to itself) a house; but truly the flimsiest of houses is the spider’s house;- if they but knew. [al-Ankabut:41]
And this is lesson enough for the most infatuated adherent of capitalism particularly in the Muslim world. Indeed, Islam has its unique economic system that produced a vibrant economy underpinning a strong state and active civic society for over 1000 years. A state that was at the forefront of new discoveries and scientific innovations which could not have been achieved without stable and sustainable economic activity. Rather then pursuing failed and flawed capitalist systems, which can not be reformed, Muslims need to implement Islam’s economic model in state and society in the Muslim world to end the misery wrought about by capitalism and to act as a beacon of light for all peoples.