Some 60 years ago the Muslim intellectual and Islamic scholar Taqiuddin An-Nabhani wrote a criticism of capitalist economic theory as an introduction to his book the “Economic System of Islam”. In it, he questioned the tendency of capitalist economists to “concentrate more on the production of wealth than on the distribution of wealth”. As a consequence, An-Nabhani said, capitalist economics “has one aim, which is to increase the country’s wealth as a whole”, a focus which he criticised since according to him the real economic problem is “the poverty of the individuals in society”, a problem that “is not treated by increasing national production but rather by the manner in which the wealth is distributed”. An-Nabhani, therefore, forewarned that while capitalist economies might deliver stellar GDP growth numbers, this would “not lead to an improvement of the welfare of all individuals nor guarantee basic welfare of every individual”, and that “poor distribution of commodities and services will dominate every society that applies capitalism”. In other words, he foresaw that capitalist growth would lead to inequality, and thus not resolve the economic problem of man.

Criticisms such as these received little to no attention from capitalism’s leading economists of the 20th century. John Maynard Keynes [1],  Milton Friedman [2] and others did not challenge the assertion that capitalist economic theory would lead economies to inequality; they asserted that such inequality would be a good thing.

According to conventional capitalist economic theory, namely, economic growth is optimised when people are left completely free to undertake the economic activities of their choice, based purely on self-interest. Since people naturally differ in their drive to establish property, as well as in their physical and mental abilities to do so, organising society in accordance with capitalist economic theory will inevitably lead to inequality. Not just inequality, both Keynes and Friedman argued, but rather inequality together with optimised economic growth. Eventually, their belief was, this would lead to a situation where total production was so high that even the poorest would have access to what they need for daily living – “a rising tide will lift all boats”.

Notes:

[1] “The General Theory and the Current Crisis: A Primer on Keynes’ Economics”, Alejandro Reuss, http://dollarsandsense.org/archives/2009/0509reusskeynesintro.html

[2] “Inequality in and beyond Friedman”, Jimmy Rising, http://www.mit.edu/~jrising/webres/justice2.1.pdf