A decade has passed since the global financial crisis.
After Lehman Brothers collapsed in 2008, the world realised banks had taken on high risks they could never have sustained.
Furthermore, weak and/or incompetent regulators, endorsed by governments, fell asleep at the wheel, allowing banks to get away with their financial antics, whilst doing nothing to prevent them .
In fact, the derivatives market that facilitated the crisis is now at least $1 quadrillion in size and remains infested with risk-heavy contracts.
When the crisis began to spread, unemployment rose sharply whilst growth plummeted, taking years to recover.
The world is still trying to heal, with some countries only recently reaching pre-crisis growth levels.
Despite their blatant crime, most banks were deemed ‘too big to fail’, only to be bailed out using taxpayer funds!
To date, the financial sector is riddled with volatility and corruption, yet no one seems to care, nor has anyone been held formally accountable.
In fact, capitalism protected those who made a profit from the crisis but imposed austerity on those who bore the brunt of their actions.
It chased growth by any means necessary, and when faced with capitulation, it used its people to save itself.
With no progress, this decade has demonstrated the fragility, not only of the financial sector, but of the system that governs it .
Islam offers a unique alternative, which eliminates risk and volatility; securing the economy in the long run.
With a profit-loss sharing system of finance, that generally avoids debt as its modus operandi, Islam takes advantage of a set of rules – ordained by the Almighty – that lead to stability .
Muhammad (ﷺ) said: “By the One in Whose hand is my soul, if a man were killed in battle for the sake of Allah, then brought back to life, then killed and brought back to life again, then killed, and he owed a debt, he would not enter Paradise until his debt was paid off.” [Al-Nasa’i]
وَالَّذِي نَفْسِي بِيَدِهِ , لَوْ أَنَّ رَجُلًا قُتِلَ فِي سَبِيلِ اللَّهِ ، ثُمَّ أُحْيِيَ ، ثُمَّ قُتِلَ ، ثُمَّ أُحْيِيَ ، ثُمَّ قُتِلَ وَعَلَيْهِ دَيْنٌ مَا دَخَلَ الْجَنَّةَ حَتَّى يُقْضَى عَنْهُ دَيْنُهُ (اَلنَّسَائِي)
Gambling is completely forbidden, whilst contracts are specific and finite in quantity; preventing the sort of manipulation that occurs within today’s financial sector, particularly within the derivative market.
…يَسْأَلُونَكَ عَنِ الْخَمْرِ وَالْمَيْسِرِ ۖ قُلْ فِيهِمَا إِثْمٌ كَبِيرٌ وَمَنَافِعُ لِلنَّاسِ وَإِثْمُهُمَا أَكْبَرُ مِن نَّفْعِهِمَا
The Almighty says: “They ask thee concerning wine and gambling. Say: “In them is great sin, and some profit, for men; but the sin is greater than the profit…” [Al-Baqarah : 219]
Furthermore, financial criminals would be held accountable for any activity that does not agree with the Islamic system.
Islam offers a solution to instability; it would fix the recurring crises that capitalism has given birth to, so that wealth is managed in a manner conducive to success and prosperity.