Islam and Capitalism: An Expected Match

Islamic capitalism

“In European countries, workers take a 15-minute smoking break; here we take a 15-minute prayer break,” said Ahmet Herdem, the mayor of Hacilar, a town of 20,000 people in central Anatolia, a deeply religious and socially conservative region which has produced some of the best-known Turkish companies.

“During this time, you are in front of God and you can ask him to help improve business and this is good for morale.”

The rise of Muslim party rule in most of the Arab States post revolution in countries with deficient economies is causing everyone to be curious about whether Islam will match well with capitalism. The answer to this is a definite yes, and Turkey is a successful representation of this unexpected mix today.

As Turkey seeks to join the European Union amid growing skepticism in Europe about the prospect of integrating a large agrarian Muslim country into one of the world’s biggest trading blocs, it presents one of the strongest arguments that Islam, capitalism and globalization can be compatible.

According to Nicholas Elliott, a regular contributor to the journal of Economic Affairs,in Istanbul, alongside the mosques are shops selling Japanese cameras. Amongst the symbols of a traditional and ancient culture you find the trappings of Western materialism. Turkey is an Islamic country as it is a member of the Islamic Conference Organization.

Many local Turkish business leaders attribute their entrepreneurial spirit to Islam. At the Kayseri sugar factory, Rifat Herdem, an adviser to the managing director, said that Islam had played an important role in buttressing profit. He said that in the early 1990s, the factory was suffering from low capacity while paying steep prices to buy sugar beets because prices were set by the state and a handful of sugar beet producers held a monopoly. But because Islam commands equal opportunity in business, the factory was pushed to expand its sourcing from one sugar-beet grower to 20,000 producers. That, in turn, brought the price of sugar down and helped lift profits. “Because of Islam we were pushed to diversify our supply chain, and this was good for business,” said Herdem.

Proto-capitalist economies and free markets were active during the Islamic Golden Age and Muslim Agricultural Revolution, where an early market economy and form of merchant capitalism took root between the 8th–12th centuries.A vigorous monetary economy was based on a widely-circulated currency (the dinar) and the integration of monetary areas that were previously independent.

Many business techniques and forms of business organization employed during the Islamic Golden Age have become implemented today such as; contracts, bills of exchange, long-distance international trade, forms of partnership (mufawada), limited partnerships (mudaraba), forms of credit, debt, profit, loss, capital (al-mal), capital accumulation (nama al-mal), circulating capital, capital expenditure, revenue, cheques, promissory notes, trusts, loaning, exchange rates, money changers, and lawsuits. Organizational enterprises independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced.

In fact, many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.

Keeping in mind that the Prophet Muhammad himself was a trader, who preached merchant honor and commanded that 90 per cent of a Muslim’s life be devoted to work, shows an obvious extension of why there seems to be a correlation between successful capitalism and a positive development of economies in countries where Islamic rule is implemented. Islam teaches people to work hard and do their best at work.

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